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Question 4 Not yet answered Points out of 3.00 P Flag question Rojo...

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Question 4 Not yet answered Points out of 3.00 P Flag question Rojo Corporation has received a request for a special order of 8,000 units of product W68 for $27.20 each. Product W68's unit product cost is $18.50, determined as follows: Direct materials... $2.20 Direct labor. 7.90 Variable manufacturing overhead...... 1.50 Fixed manufacturing overhead... | 6,90 Unit product cost .. $18.50 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 W68 that would increase direct materials by $6.50 per unit and that would require an investment of $31,000 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. AA BI TA Q1: Should Rojo accept or reject this special order? Why? (Defend your answer by discussing the relevant revenues/costs and the incremental impact on Rojo's operating net income.)

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