Katzev company manufactures a personal computer designed for use in schools and markets it under its own label. katzev has the capacity to produce 40,000 units a year but is currently producing and selling only 32,000 units a year. the computer’s normal selling price is $750 per unit with no volume discounts. the unit-level costs of the computer’s production are $250 for direct materials, $225 for direct labor, and $62.50 for indirect unit-level manufacturing costs. the total product- and facility-level costs incurred by katzev during the year are expected to be $2,000,000 and $500,000, respectively. assume that katzev receives a special order to produce and sell 6,000 computers at $562.50 each.
should katzev accept or reject the special order?

Accept the special order.

Explanation:

To accept a special order, the price of the special order should be lower than the making price.

If Katzev accepts the special order,

the revenue ($562.50 x 6,000 computers) = $3,375,000

Less: Avoidable costs (Unit-level costs)

Materials ($250 x 6,000)        1,500,000

Direct labor ($225 x 6,000)    1,350,000

Manufacturing costs                 375,000

($62.5 x 6,000)

Total Avoidable costs                                      $3,225,000

Profit if accepts the special order                 $   150,000

As the company will receive profit, the company should accept the order.

Note: Fixed costs cannot be avoided irrespective of accepting order or making products. Therefore, total product- and facility-level costs are not deducted.

c

explanation:

c because the item on a bank statement is also referred to as an account statement. in addition, it provides the beginning balance, ending balance, statement date, transaction date for each transaction, payee, customer name and address, statement period, the account holder's account number, and the bank's customer service number

um sure