template- x:y-AF 21 1 Fall 2017 Mdtem Other bookmads TB MC Qu. 07-70 A customer
ID: 2587248 • Letter: T
Question
template- x:y-AF 21 1 Fall 2017 Mdtem Other bookmads TB MC Qu. 07-70 A customer has requeste.. A customer has requested that Gamba Corporetion il a special order for 3300 unvts of product C41 for $31 a unt While the product would be modilied sighely for the specal order product product cost is $22.20 s 670 Direct lalbor Variabie menufacturing oveneed Foed menufacturing overhead Unt product cost 3.80 870 to product Q41 that would special order would have no effect on the company's totai fxed manufacturing overhead costs The customer would ike increase the variablecosb, $2.30 per unit and that would require an investment of $11.000 in special molds that would have no salvage value order is the c special order would have no effect on the company's other sales. The compary has sting income would increase idecrease) by O s2.900 O $36120 O $11200 O $00700 O Type here to search HIBAExplanation / Answer
Answer:- $36120 increase in Net operating Income
Explanation :-
Increase in Net Operating Income = $36120
Note:- As the informationgiven says, Total fixed manufacturing overhead costs will remain the same. That means whether the special order is accepted or not they will not change. That makes those costs irrelevant.
Revenue for special order (3100 × $31) $96100 Less:- Relevant Costs: Direct Materials (3100 × $6.70) (20770) Direct Labour (3100 × $3.00) (9300) Variable Manufacturing Overheads (310 × $3.80) (11780) Increased Variable Costs ( 310 × $2.30) (7130) Special Molds (11000)Related Questions
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