A Customer Has Asked Twiner Corporation to Supply 5,000 Units

question 28

Essay

A customer has asked Twiner Corporation to supply 5,000 units of product D05, with some modifications, for $40.20 each. The normal selling price of this product is $52.80 each. The normal unit product cost of product D05 is computed as follows: 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 D05 that would increase the variable costs by $3.50 per unit and that would require a one-time investment of $23,000 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.
Required:
Determine the effect on the company's total net operating income of accepting the special order. Show your work!

Realize the implications of non-compliance with the Fair Credit Billing Act by credit card issuers.

Recognize the criteria for proving deception under Section 5 of the FTC Act.

Understand the limitations of the Magnuson-Moss Act regarding sales to manufacturing plants and commercial equipment.

Acknowledge the role and jurisdiction of the Federal Trade Commission (FTC) as a federal versus state agency.

---

Definitions:

Self-Employed People

Individuals who work for themselves rather than being employed by an organization, often running their own businesses or freelancing.

Employers

Individuals or organizations that hire and pay others for their services or labor, often within a formal contractual relationship.

Employees

Individuals who are hired to perform specific duties in return for compensation, operating under the guidance and authority of an employer.

High Culture

Culture consumed mainly by upper classes.