Albatross Products Had the Following Unit Costs A One-Time Customer Has Offered to Buy 2,000 Units at r

question 97

Multiple Choice

Albatross Products had the following unit costs: $$\begin{array} { l r } \text { Direct materials } & \$ 24 \\\text { Direct labor } & 10 \\\text { Variable factory overhead } & 8 \\\text { Fixed factory overhead (allocated) } & 18\end{array}$$ A one-time customer has offered to buy 2,000 units at a special price of $48 per unit. Because of capacity constraints, 1,000 units will need to be produced during overtime. Overtime premium is $8 per unit. How much additional profit (loss) will be generated by accepting the special order?

• A)$30,000 loss
• B)$4,000 profit
• C)$24,000 loss
• D)$4,000 loss

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Definitions:

Materials Requisitions

Documents or electronic requests used in manufacturing to authorize the release of materials from inventory for production.

Job Order Cost Accounting

A cost accumulation and assignment method, specifically used for tracking and reporting costs for each individual job or project separately.

Manufacture

The process of converting raw materials or components into finished goods through the use of labor, machinery, tools, and chemical or biological processing.

Indirect Materials

Materials used in the production process that are not directly traceable to the finished product.