The following is the cost for each unit that Flyer Company produces: Materials Labor Variable overhead Fixed overhead ($1,953,000 per year; 108,500 units per year) Total $36.00 14.00 4.00 18.00 $72.00 A buyer has approached Flyer Company with an offer to buy 8,800 units for $60 each. Flyer Company's normal price is $100. Flyer Company has sufficient capacity to produce the special order units without affecting its production of units for regular customers. The buyer requires a special label to be affixed to each unit, resulting in an additional $2.00 per unit in material cost. There is no additional labor cost related to the special label (i.e., direct labor for each special order unit will be the same as direct labor for the normal units). The special order will also require the rental of equipment, which will cost $33,400. Required: 1. Prepare a schedule to analyze the impact of filling the special order on Flyer Company's profits for the year. 2. Based on financial considerations only, should Flyer Company accept the special order? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Complete the following schedule to analyze the special order. The Difference column should be With Special Order column minus Without Special Order column. Without Special Order 108,500 Units With Special Order 117,300 Units Difference Sales revenue Less variable costs: Materials Labor Variable overhead Total variable cost Contribution margin Less: Fixed costs Operating profit (loss) $ 0 $ The following is the cost for each unit that Flyer Company produces: Materials Labor Variable overhead Fixed overhead ($1,953,000 per year; 108,500 units per year) Total $36.00 14.00 4.00 18.00 $72.00 A buyer has approached Flyer Company with an offer to buy 8,800 units for $60 each. Flyer Company's normal price is $100. Flyer Company has sufficient capacity to produce the special order units without affecting its production of units for regular customers. The buyer requires a special label to be affixed to each unit, resulting in an additional $2.00 per unit in material cost. There is no additional labor cost related to the special label (i.e., direct labor for each special order unit will be the same as direct labor for the normal units). The special order will also require the rental of equipment, which will cost $33,400. Required: 1. Prepare a schedule to analyze the impact of filling the special order on Flyer Company's profits for the year. 2. Based on financial considerations only, should Flyer Company accept the special order? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Based on financial considerations only, should Flyer Company accept the special order? Yes No
