FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Tullius Corporation has received a request for a special order of 9,700 units of product C64 for $47.20 each. The normal selling price
of this product is $52.30 each, but the units would need to be modified slightly for the customer. The normal unit product cost of
product C64 is computed as follows:
Direct materials:
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Unit product cost
$18.00
7.30
4.50
7.40
$ 37.20
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 C64 that would increase the variable costs by $6.90 per unit and that would
require a one-time investment of $46,700 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.
Net operating income
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Transcribed Image Text:Tullius Corporation has received a request for a special order of 9,700 units of product C64 for $47.20 each. The normal selling price of this product is $52.30 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product C64 is computed as follows: Direct materials: Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $18.00 7.30 4.50 7.40 $ 37.20 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 C64 that would increase the variable costs by $6.90 per unit and that would require a one-time investment of $46,700 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. Net operating income
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