A Customer Has Asked Goes Corporation to Supply 6, 000

question 21

Essay

A customer has asked Goes Corporation to supply 6, 000 units of product Y19, with some modifications, for $31.30 each.The normal selling price of this product is $46.50 each.The normal unit product cost of product Y19 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 Y19 that would increase the variable costs by $8.90 per unit and that would require a one-time investment of $20, 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!

---

Definitions:

Canadian Jurisdiction

The authority and power of Canadian courts and legal bodies to govern, interpret, and apply the law within Canada's geographic and legal boundaries.

Consumer Protection Act

Legislation designed to safeguard the rights of consumers by ensuring fair trade, accurate information and preventing fraud.

Competitive Markets

A market structure characterized by a large number of buyers and sellers, where no single entity can dictate prices or market conditions.

Informed Consumer Choice

The ability of a consumer to make a decision based on full information about product benefits, risks, and alternatives.