Question

Elfalan Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 44,000 units per month is as follows:

	Per Unit
Direct materials	$	44.60
Direct labor	$	8.50
Variable manufacturing overhead	$	1.50
Fixed manufacturing overhead	$	18.10
Variable selling & administrative expense	$	2.60
Fixed selling & administrative expense	$	12.00

The normal selling price of the product is $94.10 per unit.

An order has been received from an overseas customer for 2,400 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $1.60 less per unit on this order than on normal sales.

Direct labor is a variable cost in this company.

Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $80.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be:

Answer 1