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Assume the same information as

Assume the same information as for Problem 11-44, except that the $40 fixed manufacturing overhead consists of $15 per unit batch related costs and $25 per unit facilities level fixed costs. Also, assume that each new batch causes increased costs of $15,000 per batch; the remainder of the fixed costs do not vary with the number of units produced or the number of batches. 

Batch related costs  $ 15,000 per batch
Variable Manufacturing costs  $ 20 per unit
Units in the special order  2,000 units
Special order price  $ 30


1. Calculate the relevant unit and total cost of the special order, including the new information about batch related costs.

2. If accepted, how would the special order affect Duvernoy’s operating income?

3. Suppose that Chen notifies Duvernoy it must reduce its order to 1,000 units because of changes in orders it has received. How would this change affect your answer in Parts 1 and 2?


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