A company selling a single product with the cost of producing and selling a single unit of this product at the company's normal activity level of 60000 units per year. Direct material $5.10 Direct labor $3.80 Variable management overhead $1.00 Fixed manufacturing overhead $4.70 Variable selling and administrative expenses $1.50 Fixed selling and administrative expense $2.40 Capacity per year 75000 units Normal selling price per unit $21.00 Question: an order was received as a mail-order house for 15000 units at $14.00 per unit. This order would not affect the company's regular sales or the companies total fixed cost. What is the financial advantage or disadvantage of accept this special order? Thank you,
A company selling a single product with the cost of producing and selling a single unit of this product at the company's normal activity level of 60000 units per year.
Direct material $5.10
Direct labor $3.80
Variable management
Fixed manufacturing overhead $4.70
Variable selling and administrative expenses $1.50
Fixed selling and administrative expense $2.40
Capacity per year 75000 units
Normal selling price per unit $21.00
Question: an order was received as a mail-order house for 15000 units at $14.00 per unit. This order would not affect the company's regular sales or the companies total fixed cost.
What is the financial advantage or disadvantage of accept this special order?
Thank you,
Solution:-
Calculation of financial advantage or disadvantage of acceptance special order from a mail-order house for 15000 units at $14.00 per unit.
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