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The NY Memorabilia Company produces a souvenir plate which normally sells for $79.95. The company produces 1,500 plates annually but has the capacity to produce
The NY Memorabilia Company produces a souvenir plate which normally sells for $79.95. The company produces 1,500 plates annually but has the capacity to produce 2,000 plates. A special order for manufacturing and selling 200 plates at $49.95 has been received which would not disrupt current operations. Current costs for the plate are as follows: Direct materials $17.00 Direct labor 14.50 Variable overhead 4.00 Fixed overhead 5.00 Total $40.50 In addition, the customer would like to add a date to each plate which would require an additional $2 per plate in additional labor costs and NY Memorabilia Company would also have to purchase a piece of equipment to create the date which would cost $1,200. This equipment would not have any other uses. With regard to this special order only: Answer incremental revenues will exceed incremental costs by $2,490. incremental revenues will exceed incremental costs by $890. incremental revenues will exceed incremental costs by $2,890. incremental revenues will exceed incremental costs by $1,290.
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