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Pro Supps Corporation has received a request for a special order of 7,000 units of product PS200 for KD 20.60 each. Product PS200's unit product
Pro Supps Corporation has received a request for a special order of 7,000 units of product PS200 for KD 20.60 each. Product PS200's unit product cost is KD 19.80, determined as follows Direct materials KD 6.10 Direct labor 4.30 Variable manufacturing overhead 3.20 Fixed manufacturing overhead 6.20 Unit product cost KD 19.80 The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product PS200 that would increase the variable costs by KD 3.80 per unit and that would require an investment of KD 25,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. Required: Calculate the Following if Pro Supps ACCEPTS the Order: Incremental Revenue = KD Incremental Cost = KD Financial Advantage or Disadvantage of Accepting the Order = KD Based on the information above, did Pro Supps make the correct decision in accepting the order? 12.1
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