Question
Outdoor Co. is considering a special order for 30 handcrafted tables, and each table is $170. The normal selling price of a table is $190
Outdoor Co. is considering a special order for 30 handcrafted tables, and each table is $170. The normal selling price of a table is $190 and its unit product cost as shown below:
Direct materials | $84 |
Direct labor | $45 |
Manufacturing overhead | $30 |
Unit product cost | $159 |
However, $4 of the overhead is variable with respect to the number of tables. This special order would require special paint cost costing $2 per table and would require acquisition of a special tool costing $260 that would have no other use once the special order is done.
What effect would be accepting this order have on the companys net operating income?
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