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Manganese Company makes frames. A customer wants to place a one-time special order for 1,000 frames at a discounted price of $80 per frame.
Manganese Company makes frames. A customer wants to place a one-time special order for 1,000 frames at a discounted price of $80 per frame. Manganese is currently at capacity and accepting the special order would require the company to give up selling 1,000 frames to regular customers at $100 per frame. Wood and glass for frames costs $25 per frame, variable overhead is $10 per frame, direct labor is $15 per frame, and one setup would be required for the special order at $1,500 per setup. The wages for manufacturing labor and setups will be paid regardless of whether the special order is accepted because Manganese's policy is to avoid layoffs whenever possible. What is the financial advantage or disadvantage of accepting the special order? O $20,000 disadvantage O There will be neither financial advantage nor disadvantage (i.e., there will be no effect of the special order on operating income) O $26,250 disadvantage $40.000 disadvantage
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