Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. assume a company manufactures many products, one o

Assume a company manufactures many products, one of which normally sells for $48 per unit....

70.2K

Verified Solution

Question

Accounting

Assume a company manufactures many products, one of which normally sells for $48 per unit. The companys accounting system reports the following unit product cost for this product:
Per Unit
Direct materials $ 18
Direct labor 12
Manufacturing overhead 10
Total cost $ 40
The company estimates that $3 of its manufacturing overhead varies with respect to the number of units produced. The remainder of its overhead is fixed and unaffected by the volume of units produced within the relevant range.
A customer has approached the company with an offer to buy 300 units of a customized version of the product mentioned above for $39. The company can fulfill this order using existing manufacturing capacity. To accommodate the customers desired product design, the company would incur additional direct materials cost per unit of $3. It would also have to buy a special tool for $400 that has no other use or resale value after the special order is completed. Assuming that accepting this order will not have any effect on sales to other customers, what is the financial advantage (disadvantage) of accepting the special order?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

b) Determine the force the sun exerts on a kilogram of water on the earth’s surface...

Physics
Q

The melanocyte stimulating hormone receptor gene MC1R codes for one of the key proteins involved...

Biology
Q

Let n(A) = 4 and n(A U B) = 8.(a) What are the possible values...

Basic Math
Q

Suppose that the distribution of scores of 1,000 students who take a standardized intelligence test...

Basic Math
Q

Question 1 of 10 An ice cream shop s goal is to sell a mean...

Statistics
Q

Presented here is information related to the Southern Division of Whispering Winds, Inc. \table[[Contribution...

Accounting
Q

required #3 only E11-4 (Static) Calculating Accounting Rate of...

Accounting
Q

Account Debited: Jan 2-Jan 28

Accounting
Q

50% ..I AT&T LTE 7:30 PM Done BUSN Managerial Accounting Tes... Match the costs that...

Accounting
Q

I. Assessment(s) Description When Mayor Nil Quimby ran out on the tavern he operated with...

Accounting
Q

True or False, the more selections you choose on a rate card, the more targeted...

Accounting
Q

Atascadero Industries operates a Manufacturing Division and a Marketing Division Both divisions are evaluated as...

Accounting