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ble manufacturing overhead manufacturing overhead t labor-hours ement is considering a special the unit product cost is determ t materials t labor acturing overhead applied product cost

ble manufacturing overhead manufacturing overhead t labor-hours ement is considering a special the unit product cost is determ t materials t labor acturing overhead applied product cost

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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Mcniff Corporation makes a range of products. The company's predetermined overhead rate is $23 per direct labor-hour, which was calculated using the following budgeted data: Variable manufacturing overhead Fixed manufacturing overhead Direct labor-hours Management is considering a special order for 650 units of product 096S at $59 each. The normal selling price of product 096S is $70 and the unit product cost is determined as follows: Direct materials Direct labor $ 48,000 $ 320,000 16,000 Manufacturing overhead applied Unit product cost $ 32.00 11.00 23.00 $66.00 If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special order. Required: The financial advantage (disadvantage) for the company as a result of accepting this special order would be:
Transcribed Image Text:Mcniff Corporation makes a range of products. The company's predetermined overhead rate is $23 per direct labor-hour, which was calculated using the following budgeted data: Variable manufacturing overhead Fixed manufacturing overhead Direct labor-hours Management is considering a special order for 650 units of product 096S at $59 each. The normal selling price of product 096S is $70 and the unit product cost is determined as follows: Direct materials Direct labor $ 48,000 $ 320,000 16,000 Manufacturing overhead applied Unit product cost $ 32.00 11.00 23.00 $66.00 If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special order. Required: The financial advantage (disadvantage) for the company as a result of accepting this special order would be:
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