Question
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
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 102,000 units per year is: Direct materials Direct labor Variable manufacturing overhead $ 2.30 $4.00 Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 0.80 $3.95 $ 1.30 $ 3.00 The normal selling price is $26.00 per unit. The company's capacity is 130,800 units per year. An order has been received from a mail- order house for 2,400 units at a special price of $23.00 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of accepting the special order? Financial advantage Required 2 > sa separate matter from the special order, assume the company's inventory includes 1,000 units that are inferior quality. he units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior mits to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units? ote: Round your answer to 2 decimal places. Show less
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