Business, 15.04.2020 03:16 vincentfriend

Jumonville Company produces a single product. The cost of producing and selling a single unit of this product at the company’s normal activity level of 84,000 units per month is as follows:Direct materials $31.90Direct labor 5.15Variable manufacturing overhead 2.30Fixed manufacturing overhead 13.30Variable selling & administrative expense1.80Fixed selling & administrative expense 10.90Unit product cost $65.35The normal selling price of the produce is $68.05 per unit. An order has been received from an overseas customer of 2,400 units to be delivered this month at a special discounted price. This order would have no effect on the company’s normal sales and would not change the total amount of the company’s fixed costs. The variable selling and administrative expense would be $0.85 less per unit on this order than on normal sales. Direct labor is a variable cost in this company.

Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $88.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be:

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Jumonville Company produces a single product. The cost of producing and selling a single unit of thi...

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