Exam 4 Chs 1012 150 pts Due June 16 Help SaveExitSubi TB Pro

Exam #4 (Chs 10.12) 150 pts Due June 16 Help Save&ExitSubi; TB Problem Qu. 12-189 Wehrs Corporation has received a request for a special 14 Wehrs Corporation has received a request for a special order of 9,300 units of product K19 for $46 80 each The normal seling price of this procuct is $5190 each, but the units woulkd need to be modiied slightly for the customer. The normal unit product cost of product K19 is computed as follows points Direct materiala Direct labor variable Eanufacturing overhead Pixed nanutacturing overhoad Unit product cost 517.60 0245%) 4.10 7.00 35.60 Direct labor is a variable cost. The special order would have no effect on the company\'s tocal fxed manufacturing overhead costs. The customer would like some modifications made to product K19 that would increase the voriable costs by $650 per unt and that would require a one-time investment of $46,300 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 preducing the special order Required: Determine the effect on the company\'s total net operating income of accepting the special order. clips FB F4 F3

Solution

Financial advantage/ (disadvantage) of accepting the special order: Incremental revenue (9300 units @ 46.80) 435240 Less: Incremental cost Direct Material (9300*17.60) 163680 Direct Labour (9300*6.90) 64170 variable manufacturing Oh (9300*4.10) 38130 Additional variable cost (9300*6.50) 60450 Additional of special mould 46300 Net financial advantage 62510