Tullius Corporation Has Received a Request for a Special Order

question 124

Essay

Tullius Corporation has received a request for a special order of 8, 000 units of product C64 for $50.00 each.The normal selling price of this product is $53.25 each, but the units would need to be modified slightly for the customer.The normal unit product cost of product C64 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 C64 that would increase the variable costs by $5.00 per unit and that would require a one-time investment of $43, 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!

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Definitions:

Customer Service Orientation

Approach of employee whose thoughts and actions are geared toward helping customers.

Profitable Items

Products or goods that generate a positive financial return or profit for a business.

Backstabs

Acts of betrayal or disloyalty typically involving deceitful actions against someone who trusts the betrayer.

Productivity

The quantification of how effectively a human, device, manufacturing plant, or system transforms inputs into outputs that are beneficial.