Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pink Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of

Pink Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 48,000 units per month is as follows:

Per Unit
Direct materials $ 46.60
Direct labor $ 8.90
Variable manufacturing overhead $ 1.90
Fixed manufacturing overhead $ 18.90
Variable selling & administrative expense $ 3.40
Fixed selling & administrative expense $ 16.00

The normal selling price of the product is $102.10 per unit.

An order has been received from an overseas customer for 2,800 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $2.00 less per unit on this order than on normal sales.

Direct labor is a variable cost in this company.

Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $84.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be:

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray Garrison, Eric Noreen, Peter Brewer

16th edition

1259307417, 978-1260153132, 1260153134, 978-1259307416

More Books

Students also viewed these Accounting questions