The ABC Company has an annual plant capacity of 25,000 units. Predicted data on sales and costs are given below:
Sales (20,000 units @$50) $1,000,000.00
Manufacturing Costs:
Variable $40per unit
Fixed $30,000.00
SGA
Variable (sales commission) $2.00per unit
Fixed $7,000.
A special order has been received from outside for 4,000 units at a selling price of $45 each. This order will have no effect on regular sales. The usual sales commiss ion on this order will be reduced by one half. Should the company accept the order?