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At the end of the year, a company offered to buy 4,580 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 4,580 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 60,000 units of the product that X Company has already made and sold to its regular customers:

Sales $1,140,000
Cost of goods sold 491,400
Gross margin $648,600
Selling and administrative costs 150,000
Profit $498,600

For the year, fixed cost of goods sold were $128,400, and fixed selling and administrative costs were $62,400. The special order product has some unique features that will require additional material costs of $0.77 per unit and the rental of special equipment for $3,000. 4. Profit on the special order would be

A: $6,555 B: $7,407 C: $8,370 D: $9,458 E: $10,687 F: $12,076
Tries 0/99

5. 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 $0.14. The effect of reducing the selling price will be to decrease firm profits by

A: $6,720 B: $8,400 C: $10,500 D: $13,125 E: $16,406 F: $20,508

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