Solution-Determine the effect on company total net

Determine the effect on company total net operating income

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Reference no: EM132984516

Problem - Wehrs Corporation has received a request for a special order of 9,800 units of product K19 for $4750 each. The normal selling price of this product is $52.60 each, but the units would need to be modi?ed slightly for the customer. The normal unit product cost of product K19 is computed as follows:

Direct materials $18.30

Direct labor 7.60

Variable manufacturing overhead 4.80

Fixed manufacturing overhead 7.70

Unit product cost $33.40

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 modi?cations made to product K19 that would increase the variable costs by $7.20 per unit and that would require a one-time investment of $47,000 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. Determine the effect on the company's total net operating income of accepting the special order.

Reference no: EM132984516

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Determine the effect on company total net operating income

Reference no: EM132984516

Reference no: EM132984516

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