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Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of
Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 46,000 units per month is as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling & administrative expense Fixed selling & administrative expense Per Unit $ 45.60 $ 8.70 $ 1.70 $ 18.50 $ 3.00 $ 14.00 The normal selling price of the product is $98.10 per unit. An order has been received from an overseas customer for 2,600 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.80 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $82.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multiple Choice ($39,000) $17,420 O $65,520 ($23.660)
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