A Customer Has Requested That Lewelling Corporation Fill a Special

question 405

Multiple Choice

A customer has requested that Lewelling Corporation fill a special order for 3,100 units of product S47 for $31 a unit. While the product would be modified slightly for the special order, product S47's normal unit product cost is $22.20: Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product S47 that would increase the variable costs by $2.30 per unit and that would require an investment of $11,000.00 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

• A) $36,120
• B) ($10,700)
• C) $11,200
• D) ($2,900)

Apply cost-volume-profit (CVP) analysis to predict how changes in costs, sales volume, and price affect a company's profit.

Identify and classify costs as variable, fixed, or mixed based on given scenarios.

Calculate break-even points in units and dollars using relevant formulas.

Use target income analysis to determine required sales in units or dollars to achieve a desired profit level.

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Definitions:

Separate Property

Assets owned by one spouse independently and not considered shared marital property in the event of divorce or separation.

Inheritances

Assets passed down from an individual to their heirs or designated beneficiaries upon death.

Guardian Ad Litem

A person appointed by the court to represent the interests of a child or mentally incompetent person before the court.

Appointed

Officially designated or chosen to fill a position or role.