The following are Silver Corporation's unit costs of making and selling an item at a volume of 8,000 units per month (wh
Posted: Wed May 04, 2022 4:15 pm
The following are Silver Corporation's
unit costs of making and selling an item at a volume of 8,000 units
per month (which represents the company's capacity):
Manufacturing:
Direct materials
$
4
Direct labor
$
5
Variable overhead
$
2
Fixed overhead
$
8
Selling and administrative:
Variable
$
1
Fixed
$
6
Present sales amount to 7,000 units per month.
An order has been received from a
customer in a foreign market for 1,000 units. The order would not
affect regular sales. Total fixed costs, both manufacturing and
selling and administrative, would not be affected by this order.
The variable selling and administrative costs would have to be
incurred for this special order. .
What is the financial
advantage (disadvantage) for the company from this special order if
it prices the 1,000 units at $20 per unit?
unit costs of making and selling an item at a volume of 8,000 units
per month (which represents the company's capacity):
Manufacturing:
Direct materials
$
4
Direct labor
$
5
Variable overhead
$
2
Fixed overhead
$
8
Selling and administrative:
Variable
$
1
Fixed
$
6
Present sales amount to 7,000 units per month.
An order has been received from a
customer in a foreign market for 1,000 units. The order would not
affect regular sales. Total fixed costs, both manufacturing and
selling and administrative, would not be affected by this order.
The variable selling and administrative costs would have to be
incurred for this special order. .
What is the financial
advantage (disadvantage) for the company from this special order if
it prices the 1,000 units at $20 per unit?