7

Gallerani Corporation has received a request for a special order of 4,300 units of product A90 for $26.90 each. Product A90's unit product cost is $26.40, determined as follows:

Direct materials	$	2.55
Direct labor		7.85
Variable manufacturing overhead		6.95
Fixed manufacturing overhead		9.05
Unit product cost	$	26.40

Assume that 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 modifications made to product A90 that would increase the variable costs by $3.30 per unit and that would require an investment of $22,000 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. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

9

An automated turning machine is the current constraint at Jordison Corporation. Three products use this constrained resource. Data concerning those products appear below:

		LN		JQ		RQ
Selling price per unit		$	161.91	$	330.92	$	458.94
Variable cost per unit		$	107.66	$	249.64	$	396.24
Minutes on the constraint			3.50		6.40		5.50

Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. (Round your intermediate calculations to 2 decimal places.)