Core Manufacturing makes a single product. Budget information regarding the curr

Question

Core Manufacturing makes a single product. Budget information regarding the current period is given below:

Revenue (100,000 units at $8.00) $800,000
Direct materials $170,000
Direct labor 125,000
Variable manufacturing overhead 235,000
Fixed manufacturing overhead 110,000 640,000
Total $160,000

Deer Company approaches Core with a special order for 15,000 units at a price of $8.50 per unit. Variable costs will be the same as the current production and accepting the special order will not have any impact on the rest of the company

Explanation / Answer

the new revenue from the special order =8.5 *15000 =127500$ but the costs incurred for the special order are as follows variable costs =2.35*15000 =35250$ additional fixed costs =55000$ direct costs = (1.7+1.25)*15000 =29250$ so additional costs due to special order =55000+29250+35250 =120500 hence the additional revenue =127500 - 120500 =7000$ soTHE ANS IS B cheers :) sry for the previous response here was a little confusion cheers :)

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