TB Problem Qu. 12-189 (Algo) Wehrs Corporation has received a request for a special... Wehrs Corporation has received a request for a special order of 9,800 units of product K19 for $47.50 each. The normal selling price of this product is $52.60 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials Direct labor $18.30 7.60

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TB Problem Qu. 12-189 (Algo) Wehrs Corporation has received a request for a special...
Wehrs Corporation has received a request for a special order of 9,800 units of product K19 for $47.50 each. The normal selling price of
this product is $52.60 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product
K19 is computed as follows:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Unit product cost
$18.30
7.60
4.80
7.70
$38.40
Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The
customer would like some modifications made to product K19 that would increase the variable costs by $7.20 per unit and that would
require a one-time investment of $47,000 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.
Required:
Determine the effect on the company's total net operating income of accepting the special order.
Transcribed Image Text:TB Problem Qu. 12-189 (Algo) Wehrs Corporation has received a request for a special... Wehrs Corporation has received a request for a special order of 9,800 units of product K19 for $47.50 each. The normal selling price of this product is $52.60 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $18.30 7.60 4.80 7.70 $38.40 Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product K19 that would increase the variable costs by $7.20 per unit and that would require a one-time investment of $47,000 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. Required: Determine the effect on the company's total net operating income of accepting the special order.
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