Question
Colfax Company expects to incur the following costs at the planned production level of 10,000 units: Direct materials $100,000 Direct labor 120,000 Variable overhead 60,000
Colfax Company expects to incur the following costs at the planned production level of 10,000 units: Direct materials $100,000 Direct labor 120,000 Variable overhead 60,000 Fixed overhead 30,000 The selling price is $50 per unit. The company currently operates at full capacity of 10,000 units. Capacity can be increased to 13,000 units by operating overtime. Variable costs increase by $14 per unit for overtime production. Fixed overhead costs remain unchanged when overtime operations occur. Colfax Company has received a special order from a wholesaler who has offered to buy 1,000 units at $45 each. What is the impact on Colfax's operating income if this special order is accepted?
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