As a reminder, the Lawn Mower Division is currently producing at only 70% capacity. Home Depot recently requested 50 additional EGO lawn mowers. The normal sale price for EGO lawn mowers is $549, yet Home Depot has offered only $400 each. Further, assume that in order to meet the spike in demand, Green Lawn Corp. must pay a special order fee of $600 to its main supplier, Supplier Corp, for the extra lawn mowers. Jake said that he was considering rejecting the special order due to the unprofitability of the lawn mower division and the incremental special order fee. Using the relevant information identified in the prior problem, complete the analysis below. Round to the nearest whole number and do not use decimals. Step 1: Calculate all of the per unit costs. Cost Data (per unit) Direct Materials $40 Direct Labor $84 Variable Overhead $25 Fixed Overhead $35 Sales Commission Special Order Fee *2.5% of sales price
Step 2: Analyze the special order contribution margin per unit and in total, Sales Price / unit Costs / unit CM$ / unit # units sold Total CM $ Note the available capacity and overall contribution margin. You will report these values to your manager in the next step after reviewing the feedback for this problem.