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Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of
Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 99,600 units per year is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses H $ 1.90 $ 4.00 $ 0.60 $3.45 $ 1.90 $ 3.00 The normal selling price is $21.00 per unit. The company's capacity is 127,200 units per year. An order has been received from a mail-order house for 2,300 units at a special price of $18.00 per unit. This order would not affect regular sales or total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order? 2. As a separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? Required 1 Required 2 Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) of accepting the special order?
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