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5 Special order > Jet Inc. makes a single product whose normal selling price is $20 per unit. > A foreign distributor offers to purchase
5 Special order > Jet Inc. makes a single product whose normal selling price is $20 per unit. > A foreign distributor offers to purchase 3,000 units for $10 per unit. This is a one-time order that would not affect the company s regular business. Annual capacity is 10,000 units, but Jet Inc. is currently producing and selling only 5,000 units Should Jet accept the offer? Jet Inc. Contribution Inc. Stmt, before considering special order Revenue (5,000 - $20) $ 100,000 Variable costs: Direct materials $ 20,000 Direct labor 5,000 Manufacturing overhead 10,000 Marketing costs 5,000 Total variable costs 40,000 Contribution margin 60,000 Fixed costs: Manufacturing overhead $ 28,000 Marketing costs 20,000 Total fixed costs 48,000 Net operating income $ 12,000 (This answer assumes that the fixed costs are unavoidable and that variable marketing costs must be incurred on the special order.)
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