Dalton Quilting Company makes blankets that it markets through a variety of department stores. It...
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Accounting
Dalton Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Dalton made 20,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.
Materials cost ($10 per unit 20,000)
$
200,000
Labor cost ($9 per unit 20,000)
180,000
Manufacturing supplies ($1.50 20,000)
30,000
Batch-level costs (20 batches at $2,000 per batch)
40,000
Product-level costs
80,000
Facility-level costs
145,000
Total costs
$
675,000
Cost per unit = $675,000 20,000 = $33.75
Required
Sunny Motels has offered to buy a batch of 500 blankets for $23.50 each. Dalton's normal selling price is $45 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Dalton accept the special order?
Sunny offered to buy a batch of 1,000 blankets for $23.50 per unit, calculate the relevant cost per unit for the special order. Should Dalton accept the special order?
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