Solution 1:
Computation of financial advantage (disadvantage) from Special Order | |
Amount | |
Sales Revenue (1400*$21) | $29,400 |
Less: Variable costs: | |
Direct materials (1400*$2.10) | $2,940 |
Direct Labor (1400*$2.00) | $2,800 |
Variable Manufacturing Overhead (1400*$0.50) | $700 |
Variable Selling and administrative expenses (1400*$1.60) | $2,240 |
Financial advantage from Special order | $20,720 |
Solution 2:
Unit cost relevant for establishing a minimum selling price = Variable selling and administrative expense
= $1.60 per unit
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