Situation Two; Decision-Making for Special Order Barney Quality Company makes blankets that it...
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Accounting
Situation Two; Decision-Making for Special Order
Barney Quality Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 400 units. The company makes 20,000 blankets during the actual accounting period. The cost of producing the blankets is summarized here:
Material cost - $10 per unit 20,000 units
Labor cost - $9 per unit 20,000 units
Manufacturing supplies - $1,50 x20,000 units
Batch - level costs per batch $1,000, 20,000 / 400 units = 5 batches, 5x $1,000 = $5,000
Product - level cost - $80,000 ($80,000 / 20,000 units = $ 4 per unit)
Facility - level cost - $145,000
Remember cost per unit = total cost / total units
Instructions: Describes which are the qualitative and quantitative factors that the company should consider before accepting a special order.
Caribbean Hotel has offered to buy two batch of 400 blankets for $23.75 each. Barney's normal selling price is $55 per unit. Should Barney accept or not the special order? Support your answer with a differential analysis.
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