FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Wehes Corporation has received a request for a special order of 9.200 units of product K19 for $4610 each. The normal selling price of
this product is $51.20 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 Jabor
Variable manufacturing overhead
Fixed Manufacturing overhead
5 16.90
6.20
3.40
6.30
$32.00
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 $5 80 per unit and that would
require a one-time investment of $45,600 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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Transcribed Image Text:Wehes Corporation has received a request for a special order of 9.200 units of product K19 for $4610 each. The normal selling price of this product is $51.20 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 Jabor Variable manufacturing overhead Fixed Manufacturing overhead 5 16.90 6.20 3.40 6.30 $32.00 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 $5 80 per unit and that would require a one-time investment of $45,600 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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