Special Order Marshall Company recently approached Johnson Corporation regarding manufacturing a special order of 4,000 units of product CRB2B. Marshall would reimburse Johnson for all variable manufacturing costs plus 35 percent. The per-unit data follow:
Unit sales price | $28 |
Variable manufacturing costs | 13 |
Variable marketing costs | 5 |
Fixed manufacturing costs | 4 |
Fixed marketing costs | 2 |
Johnson would have a retooling cost of $12,000 for the special order. Johnson has no alternative use of capacity.
Required Should the special order be accepted?
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