Vulture Company had the following results of operations for the first month of operations: Units produced 120,000 Units sold 120,000 Capacity (units) 150,000 Selling price per unit: $10.00 Variable costs per unit: Direct materials $1.90 Direct labor $2.05 Variable manufacturing overhead $1.15 Variable selling and administrative expense $0.75 Fixed costs (per month): Fixed manufacturing overhead $60,000 Fixed selling and administrative expense $17,500 A customer offers to buy 3,000 units at $8.00 per unit. In addition to variable manufacturing costs, the firm would also incur the $0.75 in variable selling and administrative costs if it accepts this special order. Accepting the special order would not increase fixed overhead nor fixed selling and administrative costs. What is the financial advantage (disadvantage) of accepting this special order? a. ($6,000) b. $24,000 c. $8,700 d. $6,450 e. ($23,550)
Vulture Company had the following results of operations for the first month of operations:
|
Units produced |
120,000 |
|
Units sold |
120,000 |
|
Capacity (units) |
150,000 |
|
Selling price per unit: |
$10.00 |
|
Variable costs per unit: |
|
|
Direct materials |
$1.90 |
|
Direct labor |
$2.05 |
|
Variable manufacturing |
$1.15 |
|
Variable selling and administrative expense |
$0.75 |
|
Fixed costs (per month): |
|
|
Fixed manufacturing overhead |
$60,000 |
|
Fixed selling and administrative expense |
$17,500 |
A customer offers to buy 3,000 units at $8.00 per unit. In addition to variable
| a. |
($6,000) |
|
| b. |
$24,000 |
|
| c. |
$8,700 |
|
| d. |
$6,450 |
|
| e. |
($23,550) |
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