Question

9-10-12 Saved Help Save & Exit A customer has requested that Lewelling Corporation fill a special order for 2,400 units of product 547 for $29 a un While the product would be modified slightly for the special order, product 547's normal unit product cost is $23.10: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 6.00 6.00 3.10 8.00 $23.10 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed ufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $1.60 per unit and that would require an investment of $14,000.00 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be: Multiple Choice $15,520 < Prev 18 of 21 Next >

Answer 1

A В 1 Analysis 2 Revenue $69,600 $14,400 3 Less: Direct materials 4 Less: Direct labor $14,400 5 Less: Variable manufacturing overheads 6 Less: Variable modification cost $7,440 $3,840 $14,000 $15.520 7 Less: Investment in special molds 8 Financial advantage (disadvantage) 9 Thus, the correct option is 'S15,520' Calculations are shown below А В 1 Analysis -2400*29 - 2400*6 2400 6 - 2400*3.1 -2400*1.6 14000 =B2-SUM(B3:B7 2 Revenue 3 Less: Direct materials 4 Less: Direct labor 5 Less: Variable manufacturing overheads 6 Less: Variable modification cost 7 Less: Investment in special molds 8 Financial advantage (disadvantage) 9 Thus, the correct option is '$15,520'