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 43,000 units per month is as follows: Per UnitDirect materials$44.10?Direct labor$8.40?Variable manufacturing overhead$1.40?Fixed manufacturing overhead$17.90?Variable selling & administrative expense$2.40?Fixed selling & administrative expense$11.00?The normal selling price of the product is $92.10 per unit.An order has been received from an overseas customer for 2300 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 $1.50 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 $79.40 per unit. The monthly financial advantage (disadvantage) for the company as a result of accepting this special order should be:
A. $56,580
B. $(13,340)
C. $15,410
D. $(27,000)
Answer: A
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