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Sales revenue from special order = $15.75 * 11,000 = $173,250 Direct material = $2.10 * 11,000 = ($67,100) Direct labor = $2.25 * 11,000
Sales revenue from special order = $15.75 * 11,000 = $173,250 Direct material = $2.10 * 11,000 = ($67,100) Direct labor = $2.25 * 11,000 = ($24,750) Total manufacturing overhead = $20 * 0.5 * 11,000 = ($110,000) Additional setup = ($3,700) Special device cost = ($2,400) Net loss = ($34,700) From the financial point of view, the new special orders should be rejected as its leads to net loss of $34,700
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