Question: Please answer all questions and show steps on how to solve. Thank you! Hunt Corporation makes a range of products. The company's predetermined overhead rate
Please answer all questions and show steps on how to solve. Thank you!
Hunt Corporation makes a range of products. The company's predetermined overhead rate is $ per direct laborhour, which was calculated using the following budgeted data:
Variable manufacturing overhead $
Fixed manufacturing overhead $
Direct laborhours
Management is considering a special order for units of product OS at $ each. The normal selling price of product OS is $ and the unit product cost is determined as follows:
Direct materials $
Direct labor
Manufacturing overhead applied
Unit product cost $
If the special order were accepted, normal sales of this and other products would not be
affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor hours, and total fixed manufacturing overhead would not be affected by the special order.
What is the variable portion of the manufacturing overhead rate?
How many labor hours per unit are required for the special order?
What is the variable manufacturing overhead per unit for this special order?
What is the amount of total variable cost per unit for this special order?
What is the unit contribution margin for this special order?
What is the increase in profit from accepting this special order?
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