Exercise 13-9 (Static) Special Order Decision (1.013-4) Delto 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 60,000 units per year is: Direct materiala $ 5.10 Direct labor $ 3.80 Variable manufacturing overhead 91.00 Fixed manufacturing overhead $ 4.20 Variable selling and adsinistrative expense 5.1.50 xed selling and distrative expense $ 2.40 The normal selling price is $21 per unit. The company's capacity is 75,000 units per year. An order has been received from a mall order house for 15,000 units at a special price of $14.00 per unit. This order would not affect regular sales or the company's 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 1000 units of this product that were produced last year and that are Inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. 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? Required 2 > Exercise 13-9 (Static) Special Order Decision (LO13-4) 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 60,000 units per year is: Direct materials $ 5.10 Direct labor $ 3.80 Variable manufacturing over head $ 1.00 Fixed manufacturing overhead $ 4.20 Variable selling and administrative expense $ 1.50 Fixed selling and administrative expense 5 2.40 The normal selling price is $21 per unit. The company's capacity is 75,000 units per year. An order has been received from a mail-order house for 15,000 units at a special price of $14.00 per unit. This order would not affect regular sales or the company's 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 of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. 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 As a separate matter from the special order, assume the company's Inventory includes 1,000 units of this product that were produced last year and that are inferior to the current model. The units must be sold through regular channels at reduced prices. The company does not expect the selling of these inferior units to have any affect on the sales of its current model. What unit cost is relevant for establishing a minimum selling price for the inferior units? (Round your answer to 2 decimal places Show less Relevant cost per unit Required 1
