I need help developing this SLP. Also I attached the previous one just in case is need it to develop this one since it looks like it is a continuation from the previous one.© BrainMass Inc. brainmass.com December 20, 2018, 9:20 am ad1c9bdddf
Lewis Company Special Order Decision
Relevant costs for this decision
Relevant costs are those that change with a decision. In this case, the decision is whether to accept the special order. If Lewis accepts the special order, it will cost $105 per unit in material, $60 per unit in labor and $40 per unit in variable overhead. So, these are all relevant. The fixed costs and the selling and administrative costs are not relevant because they won't change with the order.
Impact of special order on the profitability of Lewis Company
The special order will lower profits. The $180 sales price is not enough to cover the incremental costs of $105 + $60 + $40 = $205 per unit. So, they would be losing $25 per unit on the order! Bad idea! ...
Your tutorial is 488 words and gives a decision and four non-financial considerations that might give you a reason to accept the order even though the order's incremental revenues do not cover its incremental costs.