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company produces luggage that it sells at $80

2. (15 points) B Company produces luggage that it sells at $80 each. It has received orders for: (a) 1000 luggage for which the buyer is prepared to pay $60 per unit. (b) 2000 luggage at $48 each. The following information is available. Direct material per luggage Direct labor per luggage 21 32 Required: (1) Calculate the contribution per luggage of the order a. (2) Calculate the contribution per luggage of the order b. (3) State whether B company should accept either of the orders.
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Determination of Contribution per luggage for Order a) and b) Particulars Selling Price per unit 1) 2) Order a) Order b) 60.00 48.00 Less: Direct cost 21.00 32.00 53.00 7.00 21.00 32.00 53.00 (5.00) Direct material per luggage Direct labor per luggage Total direct cost Contribution per luggage 3) Since contribution for order b) is negative, only order a) should be accepted

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