Humes Corporation Makes a Range of Products

question 110

Essay

Humes Corporation makes a range of products. The company's predetermined overhead rate is $16 per direct labor-hour, which was calculated using the following budgeted data: Management is considering a special order for 700 units of product J45K at $64 each. The normal selling price of product J45K is $75 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:
If the special order were accepted, what would be the impact on the company's overall profit?

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Definitions:

Cognition

The mental action or process of acquiring knowledge and understanding through thought, experience, and the senses.

Thoughts, Beliefs

Mental processes and convictions that determine an individual's attitude and perceptions about their environment and themselves.

Unconscious Motivations

Drives and desires that influence an individual's behavior without their awareness.

Abnormal Behavior

Actions or patterns of behavior that deviate significantly from the norm or what is considered socially acceptable.