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cullumber company is considering accepting a special order. based on 9100 units, the following costs are incurred by cullumber: direct materials of $4, direct labor of $8, variable overhead of $7, and fixed overhead of $5. the wholesaler requesting the special order wants to only pay $21 for 2190 units when the normal retail unit selling price is $50. if cullumber accepts the special order, assuming it has sufficient capacity to fill the order, what amount of differential operating income (loss) would it recognize?

Respuesta :

The mount of differential operating income (loss) would Cullumber recognise if it accepts the special order, assuming it has the capacity to fulfil the order are $2,800 .

In our study of the consequences of accepting the special order, we take into account additional expenses and revenues.Effects of accepting the special order evaluated:

Incremental sales (600 units times $26) $15,600 Fewer incremental expenses.Direct materials costing $5,400 ($9 x 600 units) ($4 x 600 units) of direct labour ($2,400).Manufacturing variable costs ($2 x 600 units) ($1,200).Specialized materials cost $3 for 600 pieces, so $1,800.($2,000) Machine Cost.Financial Benefit / (Disadvantage) $2,800 Accepting the special order will yield a $2,800 .

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