A Customer Has Requested That Daleske Corporation Fill a Special

question 10

Multiple Choice

A customer has requested that Daleske Corporation fill a special order for 2,000 units of product D84 for $20.30 a unit.While the product would be modified slightly for the special order,product D84's normal unit product cost is $18.50: 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 modifications made to product D84 that would increase the variable costs by $2.50 per unit and that would require an investment of $7,000 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.If the special order is accepted,the company's overall net operating income would increase (decrease) by:

• A)($14,900)
• B)($5,800)
• C)$3,600
• D)($8,400)

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Definitions:

Freight Order Billing

The process of issuing invoices for the transportation services provided for shipping goods, based on agreed terms such as weight, distance, and type of goods.

Purchase Order

A document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.

Receiving Report

A document used by a company to record the receipt of purchased goods, verifying that the goods have been delivered as per the purchase order.

Invoice

A document issued by a seller to a buyer, detailing products or services provided, amounts owed, and payment terms.