Question

Special-Order Decision Smooth Move Company manufactures professional paperweights and has been approached by a new customer w2. CONCEPTUAL CONNECTION: Should Smooth Move accept the special order? Yes By how much will profit increase or decrease if th

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Answer #1

Solution

Increase $        18,750.00

Working

financial advantage (disadvantage) of accepting the special order
Additional Revenue from offer (15000 x $8) $    1,20,000.00
Less: Total Additional cost due to acceptance of offer $    1,01,250.00
Financial Advantage $        18,750.00

.

Calculation of Additional Cost of Order
Per Unit Total
Direct material $                   3.10 $          46,500.00
Direct labor $                   2.50 $          37,500.00
Variable manufacturing overheads   $                   1.15 $          17,250.00
Total Additional cost due to acceptance of order $                   6.75 $      1,01,250.00
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