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Should the company accept this special order or not

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Reference no: EM133094308

Question - Bowunit Company manufactures and sells flower pot stands. The company's normal selling price is $30 per unit. A breakdown of manufacturing cost per unit is provided below:

Direct materials $5.00

Direct labour $7.50

Variable manufacturing overhead $1.20

Fixed manufacturing overhead $3.30

Total manufacturing cost $17

The company receives a special order at $15.8 per unit for 4,000 units and needs to decide whether to accept this special order or not. Assume the company has excess capacity and regular sales will remain the same with or without this special order.

Required -

1. Indicate whether the company's operating income will increase or decrease if it accepts the special order.

2. How much is the increase/decrease? Only input the dollar amount.

3. Should the company accept this special order or not?

Reference no: EM133094308

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