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Assume that MTA Sandwiches sells sandwiches for $7.20 each. The cost of each sandwich follows: 2.70 Materials Labor 0.90 Variable overhead 0.45 Fixed overhead ($10.800
Assume that MTA Sandwiches sells sandwiches for $7.20 each. The cost of each sandwich follows: 2.70 Materials Labor 0.90 Variable overhead 0.45 Fixed overhead ($10.800 per month. 6.000 units per month) 80 5.85 Total costs per sandwich One of MTA s regular customers asked the company to fill a special order of sandwiches at a selling price of$5.40 each for a fund-raising event sponsored by a social club at the local college. MTA has capacity to fill it without affecting total fixed costs for the month. MTA's general manager was concerned about selling the sandwiches below the cost of $5.85 per sandwich and has asked for your advice. Required a. Prepare a schedule to show the impact on MTAs profits of providing 400 sandwiches in addition to the regular production and sales of 6,000 sandwiches per month. (Select option "higher" or ower", keeping Status Quo as the base. Select "none" if there is no effect. Status Quo Alternative Difference 6,000 Units 6,400 Units Sales revenue Less variable costs: Materials Labor Variable overhead S 0 S 0 Total variable cost Contribution margin Less: Fixed costs Operating profit
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