Welcome to Top Excellors!

Alton Inc. is working at full

Alton Inc. is working at full production capacity producing 20,000 units of a unique product. Manufacturing costs per unit for the product are

Direct materials …………. $ 9

Direct labor …………. 8

Manufacturing overhead …….. 10

Total manufacturing cost ……..$27

The unit manufacturing overhead cost is based on a $4 variable cost per unit and $120,000 fixed costs. The nonmanufacturing costs, all variable, are $8 per unit, and the sales price is $45 per unit. Sports Headquarters Company (SHC) has asked Alton to produce 5,000 units of a modification of the new product. This modification would require the same manufacturing processes. SHC has offered to share the nonmanufacturing costs equally with Alton. Alton would sell the modified product to SHC for $35 per unit.

Required

1. Should Alton produce the special order for SHC? Why or why not?

2. Suppose that Alton Inc. had been working at less than full capacity to produce 16,000 units of the product when SHC made the offer. What is the minimum price that Alton should accept for the modified product under these conditions?

Solution:

15% off for this assignment.

Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!

Why US?

100% Confidentiality

Information about customers is confidential and never disclosed to third parties.

Timely Delivery

No missed deadlines – 97% of assignments are completed in time.

Original Writing

We complete all papers from scratch. You can get a plagiarism report.

Money Back

If you are convinced that our writer has not followed your requirements, feel free to ask for a refund.