XYZ Inc. has received a request for a special order of 5,500 units of item PQR...

 

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XYZ Inc. has received a request for a special order of 5,500 units of item PQR for $27.40 each. Item PQR's cost per unit is $27.15: DM DL Var. manuf. 0/H Fixed manuf. 0/H Product cost per unit 2.80 8.10 7.20 9.05 $27.15 The order would have no effect on total fixed manufacturing overhead costs. The customer would like changes made to Item POR that would increase the variable costs by $3.80 per unit and that would require spending $27,000 in custom tools that would have no salvage value. This order wouldn't Impact regular sales. The company has enough excess capacity to make the order. The advantage (disadvantage) for XYZ Inc. as a result of doing the order should be: XYZ Inc. has received a request for a special order of 5,500 units of item PQR for $27.40 each. Item PQR's cost per unit is $27.15: DM DL Var. manuf. 0/H Fixed manuf. 0/H Product cost per unit 2.80 8.10 7.20 9.05 $27.15 The order would have no effect on total fixed manufacturing overhead costs. The customer would like changes made to Item POR that would increase the variable costs by $3.80 per unit and that would require spending $27,000 in custom tools that would have no salvage value. This order wouldn't Impact regular sales. The company has enough excess capacity to make the order. The advantage (disadvantage) for XYZ Inc. as a result of doing the order should be:

Answer rating: 100% (QA)

Cost per unit of regular Item PQR is 2715 Selling price per unit for special order is 2740 Variabl... View the full answer