QUESTION 6 Gallerani Corporation has received a request for a special order of 4,000 units of product A90 for $25.00 each. Product A90's unit product cost is $16.80, determined as follows: $ 6.50 4.20 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost 2.50 3.60 $ 16.80 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable manufacturing costs by $4.00 per unit and that would require an investment of $15,000 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: What will the annual financial advantage (disadvantage) be if the company accepts this special order. 1. Total Incremental Revenue will be (5) 3.60 Fixed manufacturing overhead Unit product cost $ 16.80 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable manufacturing costs by $4.00 per unit and that would require an investment of $15,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. Required: What will the annual financial advantage (disadvantage) be if the company accepts this special order. 1. Total Incremental Revenue will be (s) Less Total Incremental Costs: 2.1 Direct Materials Cost will be ($) 2.2 Direct Labor Cost will be (S) 2.3 Variable Manufacturing Overhead will be ($) 2.4 Fixed Costs will be ($) 3. Total Incremental Cost will be ($) 4. Financial advantage (disadvantage) will be ($)