Question
4. Exhibit 7-2 Jake Company is considering a special order for 5,000 units at a price of $60 per unit. Jake's product normally sells for
4. Exhibit 7-2 Jake Company is considering a special order for 5,000 units at a price of $60 per unit. Jake's product normally sells for $84 per unit and has variable manufacturing costs of $45 per unit and variable selling costs of $9 per unit. Fixed manufacturing costs are $150,000 and fixed selling and administrative costs are $300,000. Jake has capacity to produce 30,000 units and is currently producing 20,000 units. If the order is accepted, , Jake will incur legal fees of $7,500 in connection with the order, but there will be no variable selling costs on the special order. Refer to Exhibit 7-2. What amount of additional profit or loss will be incurred if the order is accepted? A.$300,000 B.$67,500 C.($127,500)
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