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Adams Furniture receives a special order for 10 sofas for a special price of $4,000. The direct materials and direct labor for each sofa
Adams Furniture receives a special order for 10 sofas for a special price of $4,000. The direct materials and direct labor for each sofa are $150. In addition, supervision and other fixed overhead costs average $200 per sofa. Required: a1. What is the impact on operating income from accepting the special order? a2. Based solely on a short-term financial analysis, should Adams accept the special order? b1. If Adams is currently operating at full capacity, what would be the opportunity cost per unit for lost sales to regular customers if the special sales order is accepted and the selling price per unit on regular sales equals $750? b2. Based solely on a short-term financial analysis, should Adams accept the special order if it is currently operating at full capacity? Complete this question by entering your answers in the tabs below. Req a1 Req a2 Req b1 Req b2 What is the impact on operating income from accepting the special order? by $2,500 per sofa. Operating income would increase Complete this question by entering your answers in the tabs below. Req a1 Req a2 Req b1 Req b2 Based solely on a short-term financial analysis, should Adams accept the special order? Yes No Req a1 Req a2 Req b1 Req b2 If Adams is currently operating at full capacity, what would be the opportunity cost per unit for lost sales to regular customers if the special sales order is accepted and the selling price per unit on regular sales equals $750? Opportunity cost $ 6,000 per sofa Req a1 Req a2 Req b1 Req b2 Based solely on a short-term financial analysis, should Adams accept the special order if it is currently operating at full capacity? Yes No
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