3. The Award Plus Company manufactures medals forners of athletic events and other contests. Its manufacturing plant has the capacity to duce 10,000 medals each month.
Current production and sales are 7,500 medals month. The company normally
charges $150 per medal. Cost information for the cut activity level is as Tollows:
Variable costs that vary with number of units produced
$262,500
300,000
Direct materials
Direct manufacturing labor
Variable costs (for setups, materials handling, quality control and so on)
that vary with the number of batches, 150 batches x $500 batch
75,000
Fixed manufacturing costs
275,000
Fixed marketing costs
175.000
Total costs
$1,087,500
Award Plus has just received a special one-time-order for .500 medals at $100 per medal.
Accepting the special order would not affect the company's zular business. Award Plus makes
medals for its existing customers in batch size of 50 medals ( 0 batches x 50 medals per batch
7.500 medals).
The special order requires Award Plus to make the medals i 25 batches of 100 each.
Required:
Should Award Plus accept this special order? Show calculations.
2 Suppose plant capacily were only 9,000 medals ind of 10,000 medals cach month.
The special order must either be taken in full or reje i completely. Should Award Plus
accept the special order? Show your calculations.
3 as in requirement 1, assume that monthly capacity is 10000 medals. Award plus is concerned that if it accepts the special order, its existing customers will immediately demand a price discount of $10 in which the special order is being filled. they would argue that award plus's capacity costs are now being spread over more units and that existing customers should get the benefit of those lower costs. should award plus accept the special order under these conditions? show your calculation​