Assume a company manufactures many products, one of which normally sells for $48 per unit. The companys accounting system reports the following unit product cost for this product: Per Unit Direct materials $ 18 Direct labor 12 Manufacturing overhead 10 Total cost $ 40 The company estimates that $3 of its manufacturing overhead varies with respect to the number of units produced. The remainder of its overhead is fixed and unaffected by the volume of units produced within the relevant range. A customer has approached the company with an offer to buy 300 units of a customized version of the product mentioned above for $39. The company can fulfill this order using existing manufacturing capacity. To accommodate the customers desired product design, the company would incur additional direct materials cost per unit of $3. It would also have to buy a special tool for $590 that has no other use or resale value after the special order is completed. Assuming that accepting this order will not have any effect on sales to other customers, what is the financial advantage (disadvantage) of accepting the special order?

Multiple Choice

$(300)

$900

$310

$(1,790)

Assume a company has three productsA, B, and Cthat emerge from a joint process. The selling prices and outputs for each product at the split-off point are as follows: Product Selling Price Output A $ 33 per pound 14,000 pounds B $ 29 per pound 18,000 pounds C $ 24 per pound 19,000 pounds Each product can be processed further beyond the split-off point. The additional processing costs for each product and their respective selling prices after further processing are as follows: Product Additional Processing Costs Selling Price A $ 65,000 $ 37 per pound B $ 71,000 $ 34 per pound C $ 70,000 $ 30 per pound What is financial advantage (disadvantage) of further processing Product B?

Multiple Choice

$13,000

$19,000

$11,000

$9,000