Answer:
The offer made by Sunny Motels should be accepted because it covers the variable costs with a surplus of $3. Nonetheless, it should be taking into consideration if the company has unused capacity or whether the offer affects previous sales with other costumers, etc.
Explanation:
Giving the following information:
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
RequiredSunny Motels has offered to buy a batch of 500 blankets for $23.50 each. Dalton's normal selling price is $45 per unit.
Relevant costs:
Direct materials= $10
Direct labor= $9
Manufacturing supplies= 1.5
Total variable cost= $20.5
The offer made by Sunny Motels should be accepted because it covers the variable costs with a surplus of $3. Nonetheless, it should be taking into consideration if the company has unused capacity or whether the offer affects previous sales with other costumers, etc.
