Holtrop Corporation has received a request for a special order of 9,400 units of product Z74 for $46.30 each. The normal selling price of this product is $51.40 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product Z74 is computed as follows: |
Direct materials | $17.10 |
Direct labor | 6.40 |
Variable manufacturing overhead | 3.60 |
Fixed manufacturing overhead | 6.50 |
Unit product cost | $33.60 |
Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product Z74 that would increase the variable costs by $6.00 per unit and that would require a one-time investment of $45,800 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. |
Required: |
Calculate the incremental net operating income of accepting the special order. (Omit the "$" sign in your response.) |
Incremental net operating income | $ |
Per unit | Total 9400 units | |
Incremental revenue | 46.30 | 435220 |
Incremental costs: | ||
Variable costs: | ||
Direct materials | 17.10 | 160740 |
Direct labor | 6.40 | 60160 |
Variable manufacturing overhead | 3.60 | 33840 |
Increase in variable costs | 6.00 | 56400 |
Total variable cost | 33.10 | 311140 |
Fixed costs: | ||
Purchase of special tool | 45800 | |
Total Incremental costs | 356940 | |
Incremental net operating income | 78280 | |
Incremental net operating income | 78280 |
Holtrop Corporation has received a request for a special order of 9,400 units of product Z74...
Tullius Corporation has received a request for a special order of 9,600 units of product C64 for $47.70 each. The normal selling price of this product is $52.80 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product C64 is computed as follows: Direct materials $18.50 Direct labor 7.80 Variable manufacturing overhead 5.00 Fixed manufacturing overhead 7.90 Unit product cost $39.20 Direct labor is a...
Wehrs Corporation has received a request for a special order of 9,800 units of product K19 for $47.30 each. The normal selling price of this product is $52.40 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials $ 18.10 Direct labor 7.40 Variable manufacturing overhead 4.60 Fixed manufacturing overhead 7.50 Unit product cost $ 37.60 Direct labor is a variable cost. The...
Wehrs Corporation has received a request for a special order of 8,300 units of product K19 for $45.20 each. The normal selling price of this product is $50.30 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials $ 16.00 Direct labor 5.30 Variable manufacturing overhead 2.50 Fixed manufacturing overhead 5.40 Unit product cost $ 29.20 Direct labor is a variable cost. The...
Wehrs Corporation has received a request for a special order of 9,800 units of product K19 for $47.30 each. The normal selling price of this product is $52.40 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $18.10 7.40 4.60 7.50 $37.60 Direct labor is a variable cost. The special order...
Wehrs Corporation has received a request for a special order of 9,100 units of product K19 for $46.00 each. The normal selling price of this product is $51.10 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials $ 16.80 Direct labor 6.10 Variable manufacturing overhead 3.30 Fixed manufacturing overhead 6.20 Unit product cost $ 32.40 Direct labor is a variable cost. The...
Wehrs Corporation has received a request for a special order of 9,100 units of product K19 for $46.00 each. The normal selling price of this product is $51.10 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials $ 16.80 Direct labor 6.10 Variable manufacturing overhead 3.30 Fixed manufacturing overhead 6.20 Unit product cost $ 32.40 Direct labor is a variable cost. The...
Wehrs Corporation has received a request for a special order of 9,000 units of product K19 for $45.90 each. The normal selling price of this product is $51.00 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $16.70 6.00 3.20 6.10 $32.00 Direct labor is a variable cost. The special order...
Gallerani Corporation has received a request for a special order of 4,200 units of product A90 for $26.80 each. Product A90's unit product cost is $26.20, determined as follows: $ Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost 2.50 7.80 6.90 9.00 $26.20 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90...
Gallerani Corporation has received a request for a special order of 5,000 units of product A90 for $28.50 each. Product A90's unit product cost is $27.85, determined as follows: Direct materials $ 3.35 Direct labor 8.65 Variable manufacturing overhead 7.75 Fixed manufacturing overhead 8.10 Unit product cost $ 27.85 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product...
Gallerani Corporation has received a request for a special order of 5,100 units of product A90 for $27.30 each. Product A90's unit product cost is $26.95, determined as follows: Direct materials $ 2.75 Direct labor 8.05 Variable manufacturing overhead 7.15 Fixed manufacturing overhead 9.00 Unit product cost $ 26.95 Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product...