Rush Company Gathered the Following Information Regarding Its One and Only

Essay

Rush Company gathered the following information regarding its one and only product: $\begin{array}{ll}\text { Direct materials used } & \$ 9,000 \\\text { Direct labor } & 17,000 \\\text { Variable factory overhead } & 13,000 \\\text { Fixed factory overhead } & 8,000 \\\text { Variable selling and administrative expenses } & 15,000 \\\text { Fixed selling and adminis trative expenses } & 8,000 \\\text { Units produced and sold } & 10,000 \\\text { Selling price } p \text { er unit } & \$ 10\end{array}$ Required:
a. Compute the unit manufacturing cost of the product under the absorption approach.
b. Compute the unit manufacturing cost of the product under the contribution approach.
c. Compute the effect on net income of accepting a special order for 500 units at $10 per unit assuming excess capacity.