Since 1975, Omega Corporation has produced high quality watches for men and women. Currently. Omega sells...

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Since 1975, Omega Corporation has produced high quality watches for men and women. Currently. Omega sells a silver watch for $407.00. The unit product cost for this silver watch is $263.00 as shown below. Direct materials Direct labor $145 85 33 Manufacturing overhead Unit product cost $263 Alpha Company has approached Omega about buying 20 silver watches for the discounted price of $367.00 each. Alpha Company would like a special watch strap applied to the watches that would require Omega to buy a special tool for $459 and that would Increase the direct materials cost per watch by $11. The special tool would have no other use once the special order is completed. To analyze this special order opportunity, Omega Corporation has determined that most of its manufacturing overhead is fixed and unaffected by variations in how many watches are produced in any given period. However, $12.00 of the overhead is variable with respect to the number of watches produced. The company also belleves that accepting this order would have no effect on its ability to produce and sell watches to other customers. Furthermore, the company could fuifill the special order using its existing manufacturing capacity. Required: 1. What is the financial advantage (disadvantage) of accepting the special order from Alpha Company? 2. Should the company accept the special order? Since 1975, Omega Corporation has produced high quality watches for men and women. Currently. Omega sells a silver watch for $407.00. The unit product cost for this silver watch is $263.00 as shown below. Direct materials Direct labor $145 85 33 Manufacturing overhead Unit product cost $263 Alpha Company has approached Omega about buying 20 silver watches for the discounted price of $367.00 each. Alpha Company would like a special watch strap applied to the watches that would require Omega to buy a special tool for $459 and that would Increase the direct materials cost per watch by $11. The special tool would have no other use once the special order is completed. To analyze this special order opportunity, Omega Corporation has determined that most of its manufacturing overhead is fixed and unaffected by variations in how many watches are produced in any given period. However, $12.00 of the overhead is variable with respect to the number of watches produced. The company also belleves that accepting this order would have no effect on its ability to produce and sell watches to other customers. Furthermore, the company could fuifill the special order using its existing manufacturing capacity. Required: 1. What is the financial advantage (disadvantage) of accepting the special order from Alpha Company? 2. Should the company accept the special order?

Answer rating: 100% (QA)

A 1 1 Particulars Per unit Total 20 watches 3 Increm... View the full answer