Our company manufactures and sells calculators for $80 each. A major University has offered us $55 per calculator for a one-time order of 500 calculators. Our costs to manufacture a calculator include: • direct materials, $25 per unit; • direct labor, $20 per unit; • variable factory overhead, $15 per unit; and • fixed manufacturing overhead, $12 per unit. Assume that we have excess capacity and the special order will not affect regular sales. What is the change in operating income that would result from accepting this special sales order? [Select] Should we accept the special order? [Select]

Our company manufactures and sells calculators for $80 each. A major University has offered us $55 per calculator for a one-time order of 500 calculators. Our costs to manufacture a calculator include: • direct materials, $25 per unit; • direct labor, $20 per unit; • variable factory overhead, $15 per unit; and • fixed manufacturing overhead, $12 per unit. Assume that we have excess capacity and the special order will not affect regular sales. What is the change in operating income that would result from accepting this special sales order? [Select] Should we accept the special order? [Select]

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter13: The Balanced Scorecard: Strategic-based Control

Section: Chapter Questions

Problem 8E: Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its...

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