R&W Manufacturing Company produces men’s hiker shorts. The selling price of the
ID: 2497463 • Letter: R
Question
R&W Manufacturing Company produces men’s hiker shorts. The selling price of the shorts is $33. The following standard cost data per unit includes $7.05 direct material, $4.31 direct labor and $11.04 manufacturing overhead (50% variable, 50% fixed). R&W has received a special order for 210 at a price of $19.85 each. The only additional cost of accepting the special order is a sales commission of $1.02 per unit. R&W has ample capacity to produce the special order without interrupting regular production. Ignoring qualitative factors, should R&W accept the special order?
Additional profit / (loss) $____________Explanation / Answer
Additional Profit = (19.85 - 7.05 - 4.31 - 5.52 - 1.02) x 210
= $619.50
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