In 2021 Chuck Davis braved the economic challenges of a global pandemic and fulfilled a life-long dream of opening a boutique gluten-free bakery. Since then, he has continued to develop his product lines to include muffins, tortes, and cookies.
Carla Davis has provided the following unit detail for the Muffin product line.
Muffins
Variable cost of goods sold $17.00
Variable selling & administrative 5.00
Fixed selling & administrative 4.00
Total unit cost $26.00
A new coffee shop in town approached Chuck and asked to purchase 10,000 boxes of muffins to serve in the shop. The owner has offered to pay $25.00 per box, but he would like the muffins to be individually packaged, which Chuck estimates will add $1.25 in variable selling costs per box. Since the owner has contacted Chuck directly, the bakery will save $2.00 per box in standard variable selling and administrative costs on the order.
Calculate the contribution margin per box for the special order. ROUND YOUR ANSWER TO 2 DECIMAL PLACES (#.##). DO NOT INCLUDE A $ IN YOUR ANSWER.
$ 2.25 per box
Should Charles accept the special order (YES or NO)?
YES
Answer 1:
