A customer has requested that Lewelling Corporation fill a special order for 2,700 units of product S47 for $33 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $18.40: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 5.10 4.00 2.20 7.10 $ 18.40 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 S47 that would increase the variable costs by $1.40 per unit and that would require an investment of $17,000 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:

A customer has requested that Lewelling Corporation fill a special order for 2,700 units of product S47 for $33 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $18.40: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 5.10 4.00 2.20 7.10 $ 18.40 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 S47 that would increase the variable costs by $1.40 per unit and that would require an investment of $17,000 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:

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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6 Helix Company has been approached by a new customer to provide 1,500 units of its regular product at a special price of $7 per unit. The regular selling price of the product is $9 per unit. Helix is operating at 80% of its capacity of 11,500 units. Identify whether the following costs are relevant to Helix's decision as to whether to accept the order at the special selling price. No additional fixed manufacturing overhead will be incurred because of this order. The only additional selling expense on this order will be a $0.70 per unit shipping cost. There will be no additional administrative expenses because of this order. Calculate the operating income from the order. a. Selling price b. Direct materials cost c. Direct labor cost d. Variable manufacturing overhead e. Fixed manufacturing overhead f. Regular selling expenses g. Additional selling expenses h. Administrative expenses Revenue (cost) per unit $ 7.00 (1.00) (2.00) (1.80) (0.75) (1.30) (0.70) (0.80) Relevant Not Relevant…
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Use the following information for the Quick Study below. (Algo) [The following information applies to the questions displayed below.] Helix Company is approached by a new customer to provide 1,800 units of its product at a special price of $9 per unit. The normal selling price of the product is $11 per unit. Helix is operating at 80% of its capacity of 11,500 units. No incremental fixed overhead will be incurred because of this order. Also, there will be no incremental fixed general and administrative costs because of this order. QS 23-2 (Algo) Special offer LO P7 a. Special selling price of $9.00 per unit b. Direct materials of $2.00 per unit c. Direct labor of $3.00 per unit d. Variable overhead of $2.50 per unit e. Fixed overhead of $.75 per unit f. Fixed general and administrative costs of $.60 per unit Based on income, should Helix accept this new customer order at the special price? Sales Variable costs SPECIAL OFFER ANALYSIS Direct materials Direct labor Variable overhead…