Mayflower Corp manufactures and sells medals for winners of athletic events.

Gipson Company produces and sells a single product whose selling price is $80.00 per unit
February 12, 2020
(TCO 1) Which of the following is a fixed inventoriable product cost? Commissions paid to sales
February 12, 2020

Mayflower Corp manufactures and sells medals for winners of athletic events. The company normally charges $33 per

medal. The average costs for a medal is shown below.

Direct materials:                         $12

Direct labor:                                   8

Variable manufacturing overhead:   6

Variable marketing expenses:          2

Fixed manufacturing overhead:    10 ($500,000 fixed manufacturing overhead/50,000 medals)

Total costs:                 $38

Mayflower Corp has enough idle capacity to accept a one-time only special order for 5,000 medals at $25 per medal. Hampton Company will not incur any variable marketing expenses for this order and no additional fixed costs.

Required

Should Mayflower Corp accept this special order? Please state your decision and provide numerical support for your decision.

 
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