Francis Corporation is considering a special order that it received from Russell Industries for 20 office desks at $115 per desk. Francis Corporation\'s controller has gathered the following data:Raw Materials costs per 100 desks $3,500Average hourly labor rate $6.00Standard hours to produce one desk 6.5 hoursGeneral and administrative expenses per order received $40.00Shipping cost per desk $22.00Manufacturing overhead rates per direct labor hour: Variable $4.50 Fixed $2.00The special order did not result in any additional general and administrative costs being incurred.Russell Industries will pay for shipping charges for the order. Required (ROUND ALL ANSWERS TO ONE DECIMAL PLACE) 1. Compute the cost of this order. SHOW ALL WORK 2. Compare the cost of this order with the bid price from Russell Industries. Should Francis Corporation accept this special order - Yes or No? Solution Variable COSTS: Raw Material costs(3,500/100/*20)                           700.00 Labour Costs(20*6*6.5)                           780.00 Manufacturing Overhead (20*4.5*6.5)                           585.00 Variable COSTS:                       2,065.00 Statement showing compuattaion of special order Particulars Amount Revenue(115*20)                       2,300.00 Variable COSTS: Raw Material costs(3,500/100/*20)                           700.00 Labour Costs(20*6*6.5)                           780.00 Manufacturing Overhead (20*4.5*6.5)                           585.00 Variable COSTS:                       2,065.00 Gain from order                           235.00 Note: Fixed costs will not be conbsidered while avaluating this order since they are not affected by this order. Note: Russell will pay shipping charges thus they are ignored in computng variable costs. .

1. Francis Corporation is considering a special order that it received from Russell Industries for 20
office desks at $115 per desk. Francis Corporation's controller has gathered the following
data:Raw Materials costs per 100 desks $3,500Average hourly labor rate $6.00Standard hours to
produce one desk 6.5 hoursGeneral and administrative expenses per order received
$40.00Shipping cost per desk $22.00Manufacturing overhead rates per direct labor hour:
Variable $4.50 Fixed $2.00The special order did not result in any additional general and
administrative costs being incurred.Russell Industries will pay for shipping charges for the order.
Required (ROUND ALL ANSWERS TO ONE DECIMAL PLACE)
1. Compute the cost of this order. SHOW ALL WORK
2. Compare the cost of this order with the bid price from Russell Industries. Should Francis
Corporation accept this special order - Yes or No?
Solution
Variable COSTS: Raw Material costs(3,500/100/*20)
                         700.00 Labour Costs(20*6*6.5)
                         780.00 Manufacturing Overhead
(20*4.5*6.5) Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 585.00 Variable
COSTS: Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 2,065.00 Statement showing
compuattaion of special order Particulars Amount Revenue(115*20)
                     2,300.00 Variable COSTS: Raw Material
costs(3,500/100/*20) Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 700.00
Labour Costs(20*6*6.5) Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 780.00
Manufacturing Overhead (20*4.5*6.5)
                         585.00 Variable COSTS:
                     2,065.00 Gain from order
                         235.00 Note: Fixed costs will not
be conbsidered while avaluating this order since they are not affected by this order. Note: Russell
will pay shipping charges thus they are ignored in computng variable costs.