The following are Sunflower Company's cost of making and selling an item: Description Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative Fixed selling and administrative A. Amount per unit $6 per unit. one-time only special order has been received for 400 units. The company has capacity to accept the oder and it would not affect regular sales. The sales price for the special order is $18 Total fixed costs would not be affected by this order. The variable selling and administrative costs would have to be incurred for this special order. The order would require an additional $1 per unit for specialized materials and a new machine that costs $3,000. What is the financial advantage or disadvantage of accepting the special order? O $1,400 disadvantage $3 $2 $4 $3 $5
The following are Sunflower Company's cost of making and selling an item: Description Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative Fixed selling and administrative A. Amount per unit $6 per unit. one-time only special order has been received for 400 units. The company has capacity to accept the oder and it would not affect regular sales. The sales price for the special order is $18 Total fixed costs would not be affected by this order. The variable selling and administrative costs would have to be incurred for this special order. The order would require an additional $1 per unit for specialized materials and a new machine that costs $3,000. What is the financial advantage or disadvantage of accepting the special order? O $1,400 disadvantage $3 $2 $4 $3 $5
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following are Sunflower Company's cost of making and selling an item:
Description
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative
Fixed selling and administrative
A.
Amount per unit
$6
A one-time only special order has been received for 400 units. The company has capacity to accept
the oder and it would not affect regular sales. The sales price for the special order is $18 per unit.
Total fixed costs would not be affected by this order. The variable selling and administrative costs
would have to be incurred for this special order. The order would require an additional $1 per unit for
specialized materials and a new machine that costs $3,000. What is the financial advantage or
disadvantage of accepting the special order?
$1,400 disadvantage
$3
$2
$4
$3
$5
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