The following are Alfaro 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 Direct labor Variable overhead Fixed overhead Selling and administrative: Variable Fixed $4 $5 $2 $8 $1 $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 as well as all other sales. Assume that direct labor is a variable cost. What is the financial advantage (disadvantage) for the company from this special order if it prices the 1,000 units at $18 per unit?

The following are Alfaro 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 Direct labor Variable overhead Fixed overhead Selling and administrative: Variable Fixed $4 $5 $2 $8 $1 $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 as well as all other sales. Assume that direct labor is a variable cost. What is the financial advantage (disadvantage) for the company from this special order if it prices the 1,000 units at $18 per unit?

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Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PB: The following product costs are available for Stellis Company on the production of erasers: direct...

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