Question

Pagrim Corporation makes a range of products. The company's predetermined overhead rate is $17 per direct labor how which was calculated using the following budgeted data Vanable manufacturing overhead Fored manufacturing overhead Direct labor hours 30.000 260.000 20.000 Management is considering a special order for 710 units of product NOSE at $65 each The normal selling price of product NOSE IS $75 and the unit product cost is determined as follows Direct materials Direct labor Manufacturing overhead applied Unit product cost $ 38.00 1700 17.00 S72.00 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 laboris variable cost variable manufacturing overhead is really driven by direct labor hours and total fed 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.) Profit

Answer 1

Computation Incremental Income from Special Order
Particulars	Per Unit	Amount
Additional unit - Special Order		710
Sales	76	$53,960.00
Less : Variable cost
Direct material	38	$26,980.00
Direct Labour	17	$12,070.00
Variable Manufacturing overhead (80,000/20,000)	4	$2,840.00
Net Profit		$12,070.00

Net Income will increased by 12070