A customer has requested that Gamba Corporation fill a specialorder for 3,000 units of product Q41 for $30 a unit. While theproduct would be modified slightly for the special order, productQ41 normal unit product cost is $21.30: Direct materials $ 5.40Direct labor 6.00 Variable manufacturing overhead 2.50 Fixedmanufacturing overhead 7.40 Unit product cost $21.30 Direct laboris a variable cost. The special order would have no effect on thecompany's total fixed manufacturing overhead costs. The customerwould like modifications made to product Q41 that would increasethe variable costs by $1.00 per unit and that would require aninvestment of $14,000 in special molds that would have no salvagevalue. This special order would have no effect on the company'sother sales. The company has ample spare capacity for producing thespecial order. If the special order is accepted, the company'soverall net operating income would increase (decrease) by:
A customer has requested that Gamba Corporation fill a specialorder for 3,000 units of product Q41 for $30 a unit. While theproduct would be modified slightly for the special order, productQ41 normal unit product cost is $21.30: Direct materials $ 5.40Direct labor 6.00 Variable manufacturing overhead 2.50 Fixedmanufacturing overhead 7.40 Unit product cost $21.30 Direct laboris a variable cost. The special order would have no effect on thecompany's total fixed manufacturing overhead costs. The customerwould like modifications made to product Q41 that would increasethe variable costs by $1.00 per unit and that would require aninvestment of $14,000 in special molds that would have no salvagevalue. This special order would have no effect on the company'sother sales. The company has ample spare capacity for producing thespecial order. If the special order is accepted, the company'soverall net operating income would increase (decrease) by: