Mcniff Corporation makes a range of products.The company's predetermined overhead rate is $28 per direct labor-hour,which was calculated using the following budgeted data:
Management is considering a special order for 200 units of product O96S at $122 each.The normal selling price of product O96S is $149 and the unit product cost is determined as follows:
If the special order were accepted,normal sales of this and other products would not be affected.The company has ample excess capacity to produce the additional units.Assume that direct labor is a variable cost,variable manufacturing overhead is really driven by direct labor-hours,and total fixed manufacturing overhead would not be affected by the special order.
Required:
The financial advantage (disadvantage)for the company as a result of accepting this special order would be:

Question

Mcniff Corporation makes a range of products.The company's predetermined overhead rate is $28 per direct labor-hour,which was calculated using the following budgeted data:
  Management is considering a special order for 200 units of product O96S at $122 each.The normal selling price of product O96S is $149 and the unit product cost is determined as follows:
  If the special order were accepted,normal sales of this and other products would not be affected.The company has ample excess capacity to produce the additional units.Assume that direct labor is a variable cost,variable manufacturing overhead is really driven by direct labor-hours,and total fixed manufacturing overhead would not be affected by the special order.
Required:
The financial advantage (disadvantage)for the company as a result of accepting this special order would be:

Quizplus · Accepted Answer

The Answer of Mcniff Corporation makes a range of products.The company's predetermined overhead rate is $28 per direct labor-hour,which was calculated using the following budgeted data:
  Management is considering a special order for 200 units of product O96S at $122 each.The normal selling price of product O96S is $149 and the unit product cost is determined as follows:
  If the special order were accepted,normal sales of this and other products would not be affected.The company has ample excess capacity to produce the additional units.Assume that direct labor is a variable cost,variable manufacturing overhead is really driven by direct labor-hours,and total fixed manufacturing overhead would not be affected by the special order.
Required:
The financial advantage (disadvantage)for the company as a result of accepting this special order would be:

Mcniff Corporation Makes a Range of Products