Snagless Corporation Has Received a Request for a Special Order

question 102

Essay

Snagless Corporation has received a request for a special order of 9,000 units of product ZX9 for $46.50 each.The normal selling price of this product is $51.60 each,but the units would need to be modified slightly for the customer.The normal unit product cost of product ZX9 is computed as follows:
$$\begin{array} { | l | r | } \hline \text { Direct materials } & \$ 17.30 \\\hline \text { Direct labor } & 6.60 \\\hline \text { Variable manufacturing overhead } & 3.80 \\\hline \text { Fixed manufacturing overhead } & 6.70 \\\hline \text { Unit product cost } & \$ 34.40 \\\hline\end{array}$$
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 ZX9 that would increase the variable costs by $6.20 per unit and that would require a one-time investment of $46,000 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 capacity for producing the special order.Required:
Determine the effect on the company's total net operating income of accepting the special order.Show your work!

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Definitions:

Alcohol Consumption

The act of drinking beverages containing ethanol, which can have social, cultural, and health implications.

Abolitionist Movement

A social and political campaign that existed primarily in the 18th and 19th centuries aimed at ending the practice of slavery and the slave trade in Europe and the Americas.

1830s AND 1840s

Decades marked by significant social, political, and technological changes, including the growth of the abolitionist movement and westward expansion in the United States.

William Lloyd Garrison

A prominent American abolitionist, journalist, and social reformer of the 19th century, best known for founding the anti-slavery newspaper "The Liberator" and for his radical stance on immediate emancipation.