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Your Company has capacity to produce 100,000 units and it currently producing 80,000. It received a request for a special order for 5,000 units of
Your Company has capacity to produce 100,000 units and it currently producing 80,000. It received a request for a special order for 5,000 units of its product for a selling price of $40.00 each. The per unit cost is $22.40, determined as follows: Per Unit Direct materials $2.50 Direct labor $1.90 Variable MOH $2.30 Fixed MOH $7.30 Variable Selling costs $6.60 Fixed selling costs $1.80 Total per unit cost $22.40 The customer would like modifications made to the product that would increase the variable costs by $8.10 per unit and that would require an investment of $20,000 in special molds that would have no salvage value. All of the variable selling costs would have to be paid if the special order is accepted. This special order would have no effect on the company's other sales. If the special order is accepted, what is the change to the company's overall net operating income? nt DU wh nh. Joo
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