NWWSol - Northwest Wear, Inc 1. With ample excess capacity...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Northwest Wear, Inc 1. With ample excess capacity Per Unit Total for 1,000 Units Incremental revenue . ....................................... $18.00 $18,000 Incremental costs: Variable costs: Direct materials . ......................................... 6.50 6,500 Direct labor . ............................................... 5.00 5,000 Variable manufacturing overhead . ................ 2.50 2,500 Variable selling and administrative. ............... 1.50 1,500 Total variable cost. ......................................... $ 15.50 15,500 Fixed costs: Logo stitching. ............................................ 1,000 Total incremental cost . ..................................... 16,500 Incremental net operating income . .................... $ 1,500 Note that the fixed overhead and the fixed selling and admin are not relevant since they will be incurred whether the special order is accepted or not. In other words, the total fixed costs do not change with the decision of whether to accept the special order and so are
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

NWWSol - Northwest Wear, Inc 1. With ample excess capacity...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online