Management is considering a special order for 690 units of product O96S at $63 each....
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Accounting
Management is considering a special order for 690 units of product O96S at $63 each. The normal selling price of product O96S is $74 and the unit product cost is determined as follows:
Direct materials
$
36.00
Direct labor
16.00
Manufacturing overhead applied
27.00
Unit product cost
$
79.00
If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special order.
Required:
The financial advantage (disadvantage) for the company as a result of accepting this special order would be:
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