n3, Co 10, 12,.. 6 Help TB MC Qu. 12-81 A customer has requested that Lewelling
ID: 2593253 • Letter: N
Question
n3, Co 10, 12,.. 6 Help TB MC Qu. 12-81 A customer has requested that Lewelling Corporation . A customer has requested that Lewelling Corporation fill a special order for 2.000 units of product $47 for $40 a unit. While the product would be modified slightly for the special order, product $47's normal unit product cost is $18.30 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost s 4.40 6.e8 1.58 6.49 $18.30 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed costs. The customer would like modifications made to product S47 that would increase the variable costs by $2.10 per unit and that would require an investment of $14 000:00 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 producing the special order The annual financial advantage as a r ng this special order should beExplanation / Answer
Sales = 2,000 units * 40 per unit = 80,000
Relavent costs = Variable costs + Additional fixed costs
= (4.4 + 6 + 1.5 + 2.10) * 2,000 units + 14,000
= 28,000 + 14,000
= 42,000
Financial advantage = Sales revenue - Relavent costs
= 80,000 - 42,000
= 38,000.
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