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The following information applies to April 2022 shirt production at Tolland T's: Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Total
The following information applies to April 2022 shirt production at Tolland T's: Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing cost Budgeted Mfg cost per shirt $1.60 0.90 0.70 1.00 $4.20 Variable manufacturing overhead varies with the number of units produced. Fixed manufacturing overhead of $1 per shirt is based on budgeted manufacturing overhead of $150,000 per month and budgeted production of 150,000 shirts per month. Tolland T's sells each shirt for $5. Marketing costs have two components: Variable marketing costs (sales commissions) of 5% of revenue Fixed monthly costs of $65,000 During April, Vera Ventas, a salesperson for the company, asked the president for permission to sell 1,000 shirts at $4.00 per shirt to a new customer not in Tolland's normal marketing channels. The president, Roberta Rankin (Bill's daughter), refused the special order and pointed out that the proposed selling price was less than the budgeted manufacturing cost. a. What would have been the effect on monthly operating income if the special order was accepted? (16)
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