In producing 18000 additional units fixed overhead costs

Reference no: EM13581571

Wear company is operating at 70% of its manufacturing capacity of 78,000 produce units per year. A customer has offered to buy an additional 18,000 units at $41 each and sell them outside the country so as not to compete with Company. The following data are available:

costs at 70% Capacity: Per unit. Total

Direct materials. $ 28.00 $1,528,800

Direct labor. 3.00. 163,800

Overhead( fixed and variable). 7.00. 382,200

Totals $38.00. $2,074,800

In producing 18,000 additional units, fixed overhead costs would remain at current level but increment variable overhead costs of $1.28 per unit would be incurred. What is the effect on total income if Wear company accepts this order?

Reference no: EM13581571

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