Question 19 O out of 0.5 points Daffy Duct, Inc., has the capacity to produce 12,000 cases of duct tape per year but only produces and sells 10,000 cases at $50 per case. The direct materials equals $100,000, direct labor xequals $130,000, and overhead equals $100,000. Sixty percent of the manufacturing overhead is variable. The forty percent of fixed overhead is allocated equally to all products. Dewey, Cheatum & Howe has offered to purchase 1,000 cases but at a reduced price of $40 per case. What is the additional profit (loss) of accepting this offer? ENTER NEGATIVE NUMBERS WITH A "," SIGN. DO NOT USE PARENTHESES OR DOLLAR SIGNS. EXAMPLE: -1,000 Selected Answer: 6,000 Correct Answer: 11,000 Response See Module 7, LO 7.3 Special Order Decisions Feedback: The fixed allocated overhead is irrelevant since the costs will not change if the company decides to accept the special order. Thus, the special price should be compared to the relevant incremental costs (only the variable material, labor and overhead) that will increase if the order is accepted, not the total cost. Click Here for Similar Example in YouTube