ore Manufacturing makes a single product. Budget information regarding the curre

Question

ore 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%u2019s orders. However, Core is operating at capacity and will incur an additional $55,000 in fixed manufacturing overhead if the order is accepted. What is the incremental revenue associated with accepting the special order?

$127,500

$927,500

($7,000)

$47,500

Please show work. Thanks!

Explanation / Answer

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