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By how much will vals income change

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Question - Val Company currently has the capacity to manufacture 250,000 widgets a year. The widgets normally sell for $8.00 each.
Val Company has the following costs related to manufacturing and selling 200,000 widgets:

Direct materials $300,000

Direct labor $540,000

Variable manufacturing overhead $180,000

Depreciation on equipment only used for the widgets $40,000

Depreciation on factory $100,000

Salary of widget production manager $70,000

Variable selling costs (commissions) $60,000

Fixed selling costs $80,000

Total $1,370,000

Assume Minot Inc. asks Val to complete a manufacture a special order of 10,000 widgets. Minot is willing to pay $5.50 per widget (and the sales commission will apply on this special order).

By how much will Vals income change if they accept the special order?

Reference no: EM132103794

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