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What is the financial advantage or disadvantage

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Reference no: EM132962018

Question - Collins Co. produces 10,000 units of sewing machines annually. Per unit data are given below: Selling price $150

Direct materials, direct labor, and variable manufacturing overhead 60

Fixed manufacturing overhead 30

Variable selling and administrative expenses 40

Fixed selling and administrative expenses 10

The company has received a special, one-time-only order for 400 units of the product with a selling price of $100. There would be a 60% reduction in variable selling and administrative expenses on this special order. In addition, total fixed manufacturing overhead and total fixed selling and administrative expenses of the company would not be affected by the order. If Collins Co. accepts the order, it will have no effect on other customers. What is the financial advantage or disadvantage of accepting the special order?

Reference no: EM132962018

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