The following information relates to a product produced by Orca
Company:
Direct materials | $ | 72 | |
Direct labor | 40 | ||
Variable overhead | 38 | ||
Fixed overhead | 42 | ||
Unit cost | $ | 192 | |
Fixed selling costs are $3,600,000 per year. Although production
capacity is 630,000 units per year, Orca expects to produce only
504,000 units next year. The product normally sells for $210 each.
A customer has offered to buy 60,260 units for $190 each. The
customer will pay the transportation charge on the units purchased.
If Orca accepts the special order, the effect on operating profits
would be a:
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