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12 50 points Gallerani Corporation has received a request for a special order of 4,500 units of product A90 for $27.10 each. Product A90's unit product cost is $26.80, determined as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 8 01:22:33 Unit product cost $ 2.65 7.95 7.05 9.15 $ 26.80 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $3.50 per unit and that would require an investment of $24,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multiple Choice $2,775 $1,350 < Prev 12 of 15 Nex>

12 50 points Gallerani Corporation has received a request for a special order of 4,500 units of product A90 for $27.10 each. Product A90's unit product cost is $26.80, determined as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 8 01:22:33 Unit product cost $ 2.65 7.95 7.05 9.15 $ 26.80 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $3.50 per unit and that would require an investment of $24,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multiple Choice $2,775 $1,350 < Prev 12 of 15 Nex>

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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12 50 points Gallerani Corporation has received a request for a special order of 4,500 units of product A90 for $27.10 each. Product A90's unit product cost is $26.80, determined as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 8 01:22:33 Unit product cost $ 2.65 7.95 7.05 9.15 $ 26.80 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $3.50 per unit and that would require an investment of $24,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multiple Choice $2,775 $1,350 < Prev 12 of 15 Nex>
Transcribed Image Text:12 50 points Gallerani Corporation has received a request for a special order of 4,500 units of product A90 for $27.10 each. Product A90's unit product cost is $26.80, determined as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 8 01:22:33 Unit product cost $ 2.65 7.95 7.05 9.15 $ 26.80 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $3.50 per unit and that would require an investment of $24,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multiple Choice $2,775 $1,350 < Prev 12 of 15 Nex>
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