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    Jerston Company Annual Plant Capacity

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    Jerston Company has an annual plant capacity of 3,000 units. Data concerning this product are given below:

    Annual sales at regular selling prices ............. 2500 units
    Manufacturing cost:
    Variable ................................................................$20 per unit
    Fixed (annual) ........................................................$75,000
    Selling and administrative expenses:
    Variable (sales commissions .......................................$6 per unit
    Fixed (annual) .........................................................$15,000

    The company has received a special order for 500 units at a selling price of $45 each. Regular sales would not be affected, and sales commissions on the 500 units would be reduced by one-third. This special order would have no impact on total fixed costs.

    Required: Determine whether the company should accept the special order. Show all computations.

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    https://brainmass.com/business/accounting/jerston-company-249284

    Solution Preview

    Jerston Company has an annual plant capacity of 3,000 units. Data concerning this product are given below:

    Annual sales at regular selling prices ............. 2500 units
    Manufacturing cost:
    Variable ................................................................$20 per unit
    Fixed (annual) ........................................................$75,000
    Selling and ...

    Solution Summary

    The solution examines Jerston Company annual plant capacity. The expert determines whether the company should accept the special order or not.

    $2.19

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