Dalton Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Dalton made 20,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here

Materials cost ($10 per unit × 20,000) $ 200,000
Labor cost ($9 per unit × 20,000) 180,000
Manufacturing supplies ($1.50 × 20,000) 30,000
Batch-level costs (20 batches at $2,000 per batch) 40,000
Product-level costs 80,000
Facility-level costs 145,000
Total costs $ 675,000
Cost per unit = $675,000 ÷ 20,000 = $33.75

Sunny Motels has offered to buy a batch of 500 blankets for $23.50 each. Dalton's normal selling price is $45 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Dalton accept the special order?

Sunny offered to buy a batch of 1,000 blankets for $23.50 per unit, calculate the relevant cost per unit for the special order. Should Dalton accept the special order?

$24.50 and $22.50

Explanation:

1.

Material costs, Labor costs, Manufacturing supplies and Batch level costs will be taken as relevant costs incurred for the production of blanket.

Given:

Material costs  = $10 (per unit cost)

Labor costs = $9 (per unit cost)

Manufacturing supplies = 1.50(per unit cost)

Batch level costs = $2000 per batch, so for a batch of 500 blankets = 2000/500= $4(per unit cost)

TOTAL RELEVANT COST = $10+$9+1.50+$4 = $24.50

For an offer of $23.50 per unit for the special order, Sunny Motels order should not be accept the special order because the total relevant cost is more than the price offered for the special order

2.

Material costs  = $10 (per unit cost)

Labor costs = $9 (per unit cost)

Manufacturing supplies = 1.50(per unit cost)

Batch level costs = $2000 per batch, so for a batch of 1000 blankets = 2000/1000= $2(per unit cost)

TOTAL RELEVANT COST = $10+$9+1.50+$2 = $22.50

For an offer of $23.50 per unit for the special order, Sunny Motels order should be accepted because the total relevant cost is less than the price offered for the special order by $1.00

answer; /// the use of a bank credit card to make purchase;