12 value: 6.00 points Humes Corporation makes a range of products. The company\'

Question

12 value: 6.00 points Humes Corporation makes a range of products. The company's predetermined overhead rate is $22 per direct labor-hour, which was calculated using the following budgeted data Variable manufacturing overhead Fixed manufacturing overhead Direct labor-hours $ 68,000 $306,000 17,000 Management is considering a special order for 640 units of product J45K at $58 each. The normal selling price of product J45K is $69 and the unit product cost is determined as follows Direct materials Direct labor Manufacturing overhead applied $31.00 12.00 22.00 Unit product cost 65.00 If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special order Required If the special order were accepted, what would be the impact on the company's overall profit? (Input the amount as a positive value. Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Total (Click to select) in profit

Explanation / Answer

Calculate effect of special order :

Company's overall profit increase by $7040

Incremental revenue (640*58) 37120 Incremental cost Direct material (640*31) (19840) Direct labour (640*12) (7680) Variable overhead (640*4) (2560) Total incremental cost (30080) Incremental income 7040

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