82000 units of Product C each year f Melrose produces at capacity, the per unit

Question

82000 units of Product C each year f Melrose produces at capacity, the per unit costs to produce and sell one unit of Product C are as follows: 2420 % 1700 8.60 been recelved by Melrose from Moore Corporation to punchase 6,000 units of Product C during the upcoming year it this special arder is accepted Assume Meirose expects osl 72000 units of Product C to regular customers next year if Moore company offers to buy the 6,000 special units at $0720 per unit, the effect of accepting the special order on Melroses O $206100 increse O $58400 ncrease O $12.000 decresse MacBook Ai 0F3 8

Explanation / Answer

ANSWER: $206,100 increase in NOI. Calculations: Incremental revenue = 6000*$97.20 = $          583,200 Incremental costs: Direct material = 6000*$24.20 = $          145,200 Direct labor = 6000*$19.40 = $          116,400 Variable manufacturing overhead = 6000*$14.80 = $            88,800 Variable selling expense = 6000*$13.20*25% = $            19,800 Cost of the new specialized machine $               6,900 Total incremental costs $          377,100 Incremental NOI $          206,100

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