our Corporation has received a request for a special order of 6,000 units of its product for a selling price of $13.70 each. The unit product cost is $11.50, determined as follows: Direct materials $2.50 Direct labor $1.90 Variable manufacturing overhead $2.30 Fixed manufacturing overhead $4.80 Total per unit product cost $11.50 The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to the product that would increase the variable costs by $8.10 per unit and that would require an investment of $20,000 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. If the special order is accepted, the company's overall net operating income would increase (decrease) by:
Enter your answer without dollar signs. If the impact is a loss use a negative sign in front of the number.
Your Corporation has received a request for a special order of 6,000 units of its product for a selling price of $13.70 each. The unit product cost is $11.50, determined as follows:
|
Direct materials |
$2.50 |
|
Direct labor |
$1.90 |
|
Variable manufacturing |
$2.30 |
|
Fixed manufacturing overhead |
$4.80 |
|
Total per unit product cost |
$11.50 |
The special order would have no effect on the company's total fixed
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