Assignment
Julian' Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 50.000 units per month is as follows:
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Direct materials
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$ 32.50
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Direct labor
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7.20
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Variable manufacturing overhead
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1.30
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Fixed manufacturing overhead
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20.90
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Variable selling and administrative expense
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1.90
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Fixed selling and administrative expense
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7.30
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$ 71.10
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The normal selling price of the product is $75.00 per unit.
An order has been received from an overseas customer for 3.000 units to be delivered this month at a special discounted price of $65.60 each. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $0.30 less per unit on this order than on normal sales.
• By how much would this special order increase the company's net operating income for the month? Show your work and label your answers.