Question - Simpson Company manufactures and sells trophies for winners of athletic and other events. Its manufacturing plant has the capacity to produce 20,000 trophies each month; current monthly production is 19,100 trophies. The company normally charges $42 per trophy. Cost data for the current level of production are shown below.
Variable Costs
Direct Materials $270,940
Direct Labor $96,900
Selling and Administrative $20,550
Fixed Costs
Manufacturing $125,000
Selling and Administrative $75,000
The company has just received a special one-time order for 800 trophies at $30 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.
Required: Should the company accept this special order? Provide numerical support for your decision.