A Customer Has Requested That Lewelling Corporation Fill a Special

question 182

Multiple Choice

A customer has requested that Lewelling Corporation fill a special order for 9,000 units of product S47 for $20.50 a unit.While the product would be modified slightly for the special order,product S47's normal unit product cost is $14.40:
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 $5.00 per unit and that would require an investment of $36,000 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.The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

• A) $(9,900)
• B) $4,500
• C) $54,900
• D) $(26,100)

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Definitions:

Manual Accounting Information System

A traditional system of accounting in which transactions are recorded and processed by hand without the use of automated software.

Complexity

The state or quality of being intricate or complicated, often used to describe systems, organizations, or problems.

Efficient Accounting System

A streamlined and effective method of managing and processing financial information and transactions within an organization.

Useful Output

The amount of productive work, goods, or services an organization, process, or device generates during a given period.