Question: A customer has requested a special order for 4,500 units of ABC Co's primary product for $20 a unit. While the product would be modified
A customer has requested a special order for 4,500 units of ABC Co's primary product for $20 a unit. While the product would be modified slightly for the special order, the product's normal unit product cost is: Direct materials $6.20 Direct labor $4 Variable manufacturing overhead $ 4.40 Fixed manufacturing overhead $9,30 The customer would like modifications made to the each product that would increase the variable costs by $2.20 per unit and that would require an investment of $24,000 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. How would accepting the special order impact the company's not income? Enter your answer as a positive if income would increase and a negative if it would decrease
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
