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Alpine Luggage has a capacity to produce 410.000 suitcases per year. The company is currently producing and selling 330,000 units per year at a selling
Alpine Luggage has a capacity to produce 410.000 suitcases per year. The company is currently producing and selling 330,000 units per year at a selling price of $402 per case. The cost of producing and selling one case follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs $ 162 42 79 19 $ 302 The company has received a special order for 30,000 suitcases at a price of $250 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would he only $48 pes suitcase. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case $ 250 162 42 48 19 $ (21) Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) (All revenues and costs in $000) Status Quo Alternative 330,000 Units 360,000 Units Difference Sales revenue Vanable costs Manufacturing Selling and administrative Saved $250 Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case 162 42 48 19 $ (21) Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) (All revenues and costs in 9000) Status Quo Alternative 330,000 Units 360,000 Units Difference Sales revenue Variable costs Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit b. Do you agree with the decision to reject the special order? Yes No
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