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00 Marchant Industries, which produces heating blankets, has been trying to get a customer, Home Select, Inc., to purchase a special order of heating blankets
00 Marchant Industries, which produces heating blankets, has been trying to get a customer, Home Select, Inc., to purchase a special order of heating blankets in order to keep the plant busy at a time when production is expected to be slower than normal. Home Select has agreed, but only if the price is reduced to $42. Listed below are some data prepared by Marchant. The special order can be produced within available capacity, and will be made in a single batch. Next Month's Operating Information Sales 10,000 units (made in 10 batches of 1,000 each) Sales Price Per Unit $65 Per unit costs: Variable Manufacturing Costs Batch level manufacturing costs Variable Marketing Costs Fixed Manufacturing Costs Fixed Marketing Costs Special Order Information Sales 5,000 units Sales Price Per Unit $42 There are no variable marketing costs associated with the special order, but Ruby Marchant, the president of the firm, has spent $1,500 during the past month trying to get Home Select to purchase this special order. Required: Determine the dollar effect of the special order, if taken, on Marchant's total operating profit. (Show calculations.) 00 w
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