Answer:
The annual financial advantage for the company as a result of accepting this special order should be: $16,720
Explanation:
Fixed Manufacturing Overheads are irrelevant for this decision since The company has ample spare capacity for producing the special order and no need to alter existing capacity.
<u>Incremental Costs and Revenues - special order</u>
Sales ( 2,100 units × $26 )                                                  54,600
Direct materials ( 2,100 units × $ 5.70
)                               (11,970)
Direct labor ( 2,100 units × $3.00
)                                      ( 6,300)
Variable manufacturing overhead  ( 2,100 units ×$2.80)  (5,880)
Incremental Variable Cost ( 2,100 units × $1.30)              ($2,730)
Investment in Special Molds                                             ($11,000)
Incremental Income/(loss)                                                  $16,720
Therefore, The annual financial advantage will be  $16,720