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Jensen Communications produces a Wi-Fi router. The cost of producing a single router at the company's normal activity level of 80,000 units per year is:
Jensen Communications produces a Wi-Fi router. The cost of producing a single router at the company's normal activity level of 80,000 units per year is: Direct Materials $9.20 Direct Labor $6.20 Variable Manufacturing Overhead $1.00 Fixed Manufacturing Overhead $4.80 Variable Selling and Administrative Expense $4.80 Fixed Selling and Administrative Expense $2.40 The normal selling price of a router is $42 per unit. The company's total capacity is 100,000 routers per year. An order has been received from a foreign company for 20.000 routers at a special price of $20 per router. This special order would not affect regular router sales or the company's total fixed costs. REQUIRED: 1. Determine if this special order should be accepted or rejected. 2. Identify the impact to the company's net operating income for your decision in requirement 1
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