Question
Pilgrim Corporation makes a range of products. The company's predetermined overhead rate is $24 per direct labor-hour, which was calculated using the following budgeted data:
Pilgrim Corporation makes a range of products. The company's predetermined overhead rate is $24 per direct labor-hour, which was calculated using the following budgeted data: |
Variable manufacturing overhead | $ | 84,000 | |
Fixed manufacturing overhead | $ | 420,000 | |
Direct labor-hours | 21,000 | ||
Management is considering a special order for 780 units of product N89E at $72 each. The normal selling price of product N89E is $83 and the unit product cost is determined as follows: |
Direct materials | $ | 45.00 | |
Direct labor | 16.00 | ||
Manufacturing overhead applied | 24.00 | ||
Unit product cost | $ | 85.00 | |
If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special order. |
Required: |
If the special order were accepted, what would be the impact on the company's overall profit? (Input the amount as a positive value. Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount.)
total ______ in profit ________ |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started