The Sparkle Company manufactures affordable costume jewelry. At the beginning of the year, the Sparkle...
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The Sparkle Company manufactures affordable costume jewelry. At the beginning of the year, the Sparkle Company received a request from an oversees customer who would like to purchase 10,000 necklaces for a Breast Cancer Fund Raising event; due to the large order the customer has offered to purchase each necklace for $10 (current selling price is $20 per unit). If the Sparkle Company accepts the special order, then an additional $2,000 in shipping costs and $5,000 in custom packaging/wrapping will be incurred. The company currently has the capacity to produce the 10,000 necklaces without incurring any additional fixed costs for factory space (current production 150,000 necklaces each year - maximum capacity is 200,000 units a year). Current Selling Price Direct Labor per unit Direct Materials per unit Fixed Cost per unit Total Cost per Unit $20.00 $2.00 $6.00 $7.00 $15.00 What are the total relevant costs per unit to be considered in deciding whether or not to accept or reject this special order
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