Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Digital Devices, Inc. has received a special order to manufacture 10,000 CD ROM drives for an Italian computer manufacturer. Digital determines that the order will
Digital Devices, Inc. has received a special order to manufacture 10,000 CD ROM drives for an Italian computer manufacturer. Digital determines that the order will not affect its current domestic sales of CD ROM drives and because of the special nature of the order no sales commission would be paid. However, to process the order for export, an additional handling cost of $10 per unit is estimated. The order indicates that the price of the drives cannot exceed $200. The company has the capacity to produce 100,000 units annually but is currently operating at 75% of available capacity. Unit selling price and costs, based on estimated actual capacity being utilized, are as follows: $ 260 Selling price Expenses: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Sales commission Fixed administrative expenses Total Do not enter commas, decimal points or dollar signs in your answers. S 80 40 50 30 26 8 $ 234 Should the Special Order be accepted or not? Y=Yes or N=No How much would Digital Devices receive/lose if they accepted the Special Order? Revenue from Special Order: Sales Price/unitx number of Units = Relevant Cost for Special Order: X number of Units = Quantity TOTAL Relevant Cost (# of Units X relevant cost/ unit) = Total Relevant Cost for Special Order
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started