Humes Corporation makes a range of products.The company's predetermined overhead rate is $16 per direct labor-hour,which was calculated using the following budgeted data: Management is considering a special order for 700 units of product J45K at $64 each.The normal selling price of product J45K is $75 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:
If the special order were accepted,what would be the impact on the company's overall profit?

Question

Humes Corporation makes a range of products.The company's predetermined overhead rate is $16 per direct labor-hour,which was calculated using the following budgeted data:  Management is considering a special order for 700 units of product J45K at $64 each.The normal selling price of product J45K is $75 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:
If the special order were accepted,what would be the impact on the company's overall profit?

Quizplus · Accepted Answer

The Answer of Humes Corporation makes a range of products.The company's predetermined overhead rate is $16 per direct labor-hour,which was calculated using the following budgeted data:  Management is considering a special order for 700 units of product J45K at $64 each.The normal selling price of product J45K is $75 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:
If the special order were accepted,what would be the impact on the company's overall profit?

Humes Corporation Makes a Range of Products