2.
Wehrs Corporation has received a request for a special order of 9,500 units of product K19 for $46.40 each. The normal selling price of this product is $51.50 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $17.20 6.50 3.70 6.60 $34.00 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product K19 that would increase the variable costs by $6.10 per unit and that would require a one-time investment of $45,900 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. Required: Determine the effect on the company's total net operating income of accepting the special order. Increase Decrease Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Products A B C D $14.00 $ 9.90 $10.70 $10.30 19.10 27.10 33.30 40.10 4.00 2.40 2.30 2.90 26.20 34.50 26.30 36.90 $63.30 $ 73.90 $72.60 $90.20 Additional data concerning these products are listed below. Grinding minutes per unit Selling price per unit Variable selling cost per unit Monthly demand in units Products A B C D 3.50 5.00 4.00 3.10 $75.80 $93.20 $87.10 $103.90 $ 1.90 $ 0.90 $ 3.00 $ 1.30 3,700 3,700 2,700 2,900 The grinding machines are potentially the constraint in the production facility. A total of 53,400 minutes are available per month on these machines. Direct labor is a variable cost in this company. How many minutes of grinding machine time would be required to satisfy demand for all four products? Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Products A B C D $17.30 $21.20 $14.20 $16.90 19.30 22.70 17.10 11.10 6.10 7.30 9.80 6.80 29.20 16.10 16.20 18.20 71.90 67.30 57.30 53.00 Additional data concerning these products are listed below. Grinding minutes per unit Selling price per unit Variable selling cost per unit Monthly demand in units Products A B C 2.30 1.35 0.90 1.20 $87.20 $ 79.60 $76.40 $71.10 $ 3.05 $ 3.75 $ 4.50 $ 5.20 4,700 3,700 3,700 5,700 The grinding machines are potentially the constraint in the production facility. A total of 10,500 minutes are available per month on these machines. Direct labor is a variable cost in this company. Which product makes the MOST profitable use of the grinding machines? (Round your intermediate calculations to 2 decimal places.)
