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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 54,000 units per month is as follows: Per Unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling & administrative expense Fixed selling & administrative expense $49.60 $ 9.50 $ 2.50 $20.10 $ 4.60 $22.00 The normal selling price of the product is $114.10 per unit. An order has been received from an overseas customer for 3,400 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 $2.60 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 $90.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multiple Choice ($72,000) $22.780 O O $91.120 O ($60,860)
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