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How much better or worse off is circus toys

    Assignment Instructions

    Assignment ID: FG133135150

    Question – Circus Toys produces a plastic three-ring circus set. The set sells for $102. The capacity of the plant is 20,000 sets per year. Production costs are as follows for 20,000 sets:

    Per unit

    Direct materials

    $ 10.00

    Direct labor


    Variable overhead


    Variable Selling costs


    Fixed overhead


    Total Cost


    A Canadian store, which had previously not purchased from Circus Toys, has approached the marketing manager about buying 6,000 sets for $88/set. No selling expenses would be incurred in this offer, but the Canadian firm wants its store name put on the package, which means an additional $2.50 cost per unit to Circus Toys. Because the company is currently selling 19,000 sets, acceptance of this special order would require it to reject some of its current business.

    Required – How much better or worse off is Circus Toys if they accept the special order? Show computations.

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