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Wehrs Corporation Has Received a Request for a Special Order

question 73

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Wehrs Corporation has received a request for a special order of 6,000 units of product K19 for $32.30 each. The normal selling price of this product is $33.45 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows:
Wehrs Corporation has received a request for a special order of 6,000 units of product K19 for $32.30 each. The normal selling price of this product is $33.45 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product K19 is computed as follows:    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 some modifications made to product K19 that would increase the variable costs by $4.90 per unit and that would require a one-time investment of $23,000 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.Required:Determine the effect on the company's total net operating income of accepting the special order. 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 some modifications made to product K19 that would increase the variable costs by $4.90 per unit and that would require a one-time investment of $23,000 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.Required:Determine the effect on the company's total net operating income of accepting the special order.

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Definitions:

Neural Pathway

A series of connected neurons along which electrical and chemical signals travel within the nervous system.

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The process of disseminating or spreading information among a group or over a network, ensuring accessibility and understanding by intended audiences.

Retina

A layer of cells at the back of the eye, sensitive to light, which triggers nerve impulses that pass via the optic nerve to the brain, where a visual image is formed.

Electromagnetic Energy

A form of energy that is reflected or emitted from objects in the form of electrical and magnetic waves that can travel through space.

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