Flounder Company is a leading manufacturer of sunglasses. One of Flounder's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Flounder about purchasing 28,700 pairs of these sunglasses. Flounder's unit manufacturing cost, based on a full capacity of 242,000 units, is as follows: Direct materials Direct labor Manufacturing overhead (75% fixed) Total manufacturing costs $7 5 25 $37 Flounder also incurs selling and administrative expenses of $74,200 plus $3 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Flounder's normal price for these sunglasses is $42 per pair. The sporting goods store has offered to pay $36 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid. What would be the effect on Flounder's income if the special order were accepted? Flounder's income will increase ✓by $ 538125

Flounder Company is a leading manufacturer of sunglasses. One of Flounder's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Flounder about purchasing 28,700 pairs of these sunglasses. Flounder's unit manufacturing cost, based on a full capacity of 242,000 units, is as follows: Direct materials Direct labor Manufacturing overhead (75% fixed) Total manufacturing costs $7 5 25 $37 Flounder also incurs selling and administrative expenses of $74,200 plus $3 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Flounder's normal price for these sunglasses is $42 per pair. The sporting goods store has offered to pay $36 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid. What would be the effect on Flounder's income if the special order were accepted? Flounder's income will increase ✓by $ 538125

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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