Gallerani Corporation Has Received a Request for a Special Order

question 188

Multiple Choice

Gallerani Corporation has received a request for a special order of 6,000 units of product A90 for $21.20 each.Product A90's unit product cost is $16.20, determined as follows: 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 A90 that would increase the variable costs by $4.20 per unit and that would require an investment of $21,000 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)$(18,600)
• B)$(16,200)
• C)$30,000
• D)$5,400

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Definitions:

Social Impact

The effect that individuals, organizations, or activities have on the well-being of a community or society at large.

Confrontational

Inclined toward or characterized by direct, often hostile opposition or challenge.

Consistent

Referring to something that is uniform, steady, or unchanged over time or across situations.

Viable Alternative

A feasible or practical option that serves as a substitute or replacement for something else.