Reference no: EM132619453

Question - Gallerani Corporation has received a request for a special order of 5,100 units of product A90 for $28.60 each. Product A90's unit product cost is $28.05, determined as follows:

Direct Materials $3.40

Direct Labor $8.70

Variable MOH $7.80

Fixed MOH $8.15

Unit Product Cost $28.05

Assume that direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product A90 that would increase the variable costs by $4.90 per unit and that would require an investment of $16,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. Find the annual financial advantage (disadvantage) for the company as a result of accepting this special order?

A. (38,185)

B. 3,380

C. 2,805

D. (97,155)