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