Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

At the end of the year, a company offered to buy 4,630 units of a product from X Company for $11.00 each instead of the

At the end of the year, a company offered to buy 4,630 units of a product from X Company for $11.00 each instead of the company's regular price of $19.00 each. The following income statement is for the 68,700 units of the product that X Company has already made and sold to its regular customers:

Sales $1,305,300
Cost of goods sold 599,064
Gross margin $706,236
Selling and administrative costs 169,002
Profit $537,234

For the year, variable cost of goods sold were $460,977, and variable selling and administrative costs were $99,615. The special order product has some unique features that will require additional material costs of $0.72 per unit and the rental of special equipment for $3,000. (2 Parts) 1. Profit on the special order would be :

2 The marketing manager thinks that if X Company accepts the special order, regular customers will be lost unless the selling price for them is reduced by $0.11. The effect of reducing the selling price will be to decrease firm profits by (is the answer 8,539) ?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Michelle Hanlon, Robert Magee, Glenn Pfeiffer, Thomas Dyckman

5th Edition

1618531654, 9781618531650

More Books

Students also viewed these Accounting questions

Question

3.1 Given A = 3E1, E3, E6, E94 , define A.

Answered: 1 week ago