Tullius Corporation Has Received a Request for a Special Order

question 111

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:

Multicellular Eukaryotes

Organisms composed of multiple cells with a distinct nucleus and organelles, including plants, animals, and fungi.

Arthropods

A vast phylum that includes insects, arachnids, myriapods, and crustaceans, characterized by their exoskeleton, segmented bodies, and jointed appendages.

Median Plane

An anatomical reference plane that divides the body into equal left and right halves.

Frontal

Pertaining to the front part of something, especially the frontal bone or frontal lobe of the brain.