Elfalen Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 80,000 units per month is as follows:- **Direct materials**: $22.50 per unit- **Direct labor**: $7.50 per unit- **Variable manufacturing overhead**: $1.70 per unit- **Fixed manufacturing overhead**: $19.00 per unit- **Variable selling & administrative expense**: $2.70 per unit- **Fixed selling & administrative expense**: $8.60 per unitThe normal selling price of the product is $67.80 per unit.An order has been received from an overseas customer for 3,000 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.90 less per unit on this order than on normal sales. Direct labor is a variable cost in this company.Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $60.60 per unit. The monthly financial advantage (or disadvantage) for the company as a result of accepting this special order should be:- ○ ($4,200)- ○ $84,300- ○ ($15,900)- ○ $27,300

Name: Elfalen Corporation produces a single product. The cost of producing
Uploaded: 2024-03-20T06:32:49.000Z
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Description: Elfalen Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 80,000 units per month is as follows:- **Direct materials**: $22.50 per unit- **Direct labor**:

Solution: Relevant unit cost for special order = $22.50 + $7.50 + $1.70 + ($2.70 - $1.90) = $32.50 Monthly financial advantage (Disadvantage) for company as a result of accepting special order = Revenue from special order - Relevant cost of special order = (3000*$60.60) - (3000*$32.50) = $84,300 Hence 2nd option is correct.

Business

Accounting

Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 80,000 units per month is as follows: Direct materials Direct labor Variable manufacturing overhead Fbed manufacturing overhead Variable selling & administrative expense Fixed selling & administrative expense Per Unit $ 22.50 $7.50 $1.70 $ 19.00 $2.70 $8.60 The normal selling price of the product is $67.80 per unit. An order has been received from an overseas customer for 3,000 units to be delivered this month at special discounted price. This order would not change the total amount of the company's fixed costs The variable selling and administrative expense would be $1.90 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is ample idle capacity to produce the units required by the overseas customer and th special discounted price on the special order is $60.60 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be:

Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 80,000 units per month is as follows: Direct materials Direct labor Variable manufacturing overhead Fbed manufacturing overhead Variable selling & administrative expense Fixed selling & administrative expense Per Unit $ 22.50 $7.50 $1.70 $ 19.00 $2.70 $8.60 The normal selling price of the product is $67.80 per unit. An order has been received from an overseas customer for 3,000 units to be delivered this month at special discounted price. This order would not change the total amount of the company's fixed costs The variable selling and administrative expense would be $1.90 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is ample idle capacity to produce the units required by the overseas customer and th special discounted price on the special order is $60.60 per unit. The monthly 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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