Mcniff Corporation Makes a Range of Products

question 38

Essay

Mcniff Corporation makes a range of products.The company's predetermined overhead rate is $28 per direct labor-hour, which was calculated using the following budgeted data: Management is considering a special order for 200 units of product O96S at $122 each.The normal selling price of product O96S is $149 and the unit product cost is determined as follows: If the special order were accepted, normal sales of this and other products would not be affected.The company has ample excess capacity to produce the additional units.Assume that direct labor is a variable cost, variable manufacturing overhead is really driven by direct labor-hours, and total fixed manufacturing overhead would not be affected by the special order.

Required:
The financial advantage (disadvantage)for the company as a result of accepting this special order would be:

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