Special Order Shilling Manufacturing produces and sells oil filters for $3.25 each. A retailer has offered...
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Special Order Shilling Manufacturing produces and sells oil filters for $3.25 each. A retailer has offered to purchase 20,000 oil filters for $1.55 per filter. Of the total manufacturing cost per filter of $2.10, $1.30 is the variable manufacturing cost per filter. For this special order, Shilling would have to buy a special stamping machine that costs $8,000 to mark the customer's logo on the special order oil filters. The machine would be scrapped when the special order is complete. The special order would use manufacturing capacity that would otherwise be idle. No variable nonmanufacturing costs would be incurred by the special order. Regular sales would not be affected by the special order. What would be the impact to operating income from the special order? A. Loss of $19,000 B. Loss of $11,000 C. Profit of $5,000 D. Loss of $3,000 Special Order Shilling Manufacturing produces and sells oil filters for $3.25 each. A retailer has offered to purchase 20,000 oil filters for $1.55 per filter. Of the total manufacturing cost per filter of $2.10, $1.30 is the variable manufacturing cost per filter. For this special order, Shilling would have to buy a special stamping machine that costs $8,000 to mark the customer's logo on the special order oil filters. The machine would be scrapped when the special order is complete. The special order would use manufacturing capacity that would otherwise be idle. No variable nonmanufacturing costs would be incurred by the special order. Regular sales would not be affected by the special order. What would be the impact to operating income from the special order? A. Loss of $19,000 B. Loss of $11,000 C. Profit of $5,000 D. Loss of $3,000
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