Humes Corporation makes a range of products. The company\'s predetermined overhe

Question

Humes Corporation makes a range of products. The company's predetermined overhead rate is $25 per direct labor-hour, which was calculated using the following budgeted data:

Management is considering a special order for 790 units of product J45K at $73 each. The normal selling price of product J45K is $84 and the unit product cost is determined as follows:

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.

If the special order were accepted, what would be the impact on the company's overall profit?

  Variable manufacturing overhead $ 75,000   Fixed manufacturing overhead $ 300,000   Direct labor-hours 15,000

Explanation / Answer

Solution-

Variable manufacturing overhead $75,000 Divide-Direct labor-hours 15,000 Variable portion of the manufacturing overhead rate $5

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.