Accounting

Susan , a salesperson of Camping Supplies has been approached by Outdoor Explorer, an adventure supplies retailer, interested in purchasing knapsacks from Camping Supplies. The retailer would like to purchase 30,000 knapsacks for $40.50 per knapsack. Outdoor Explorer would require each knapsack to display the company logo on each knapsack. This will require an additional cost of $2.60 per knapsack. Camping Supplies production capacity is 120,000 knapsacks and current production for current customers is 80,000 knapsacks. Current selling price to current customers is $42.75 per unit. Current per unit cost of producing and selling to current customers: Direct materials per unit $9.25 Direct labour per unit $4.50 Variable overhead per unit $1.75 Commission per unit $1.40 Fixed production $160,000 ($2.00 per unit) Fixed selling expenses $24,000 ($0.30 per unit) To facilitate acceptance of the order, Susan has agreed to a reduction in sales commission to $0.90 per unit for each unit sold to Outdoor Explorer. Format BIU . . . A. What is the cost of producing one unit for Outdoor Explorer? Show workings. (3 marks) B. What is the increase or decrease in income for Camping Supplies if the order from Outdoor Explorer is accepted? Should the order be accepted? Show