Question 27

A customer has requested that Lewelling Corporation fill a speclal order for 2,800 units of product S47 for $32 a unt. Whille the product would be modified slightly for the special order, product 547s normal unit product cost is $17.70: Direct nateriala Direct labor Variable manufacturing $ 5.20 3.00 2.30 7.20 $17.70 Fixed manufacturing overhead Unit product cost Assume that direct labor is a varlable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like moditications made to product S47 that would ncrease the varlable costs by $1.30 per unit and that would require an Investment of $16,000.00 In special molds that would have no salvage value. This special order would have no effect on the company's other sa es. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multipie Choice $40,560 ($15,700) $16,200 $2,600)