Question
At the end of the year, a company offered to buy 4,950 units of a product from X Company for a special price of $12.00
At the end of the year, a company offered to buy 4,950 units of a product from X Company for a special price of $12.00 each instead of the company's regular price of $17.00 each. The following information relates to the 62,300 units of the product that X Company made and sold to its regular customers during the year:
Per-Unit | Total | ||
Cost of goods sold | $8.38 | $522,074 | |
Period costs | 2.54 | 158,242 | |
Total | $10.92 | $680,316 |
Fixed cost of goods sold for the year were $114,009, and fixed period costs were $90,335. Variable period costs include selling commissions equal to 3% of revenue
Assume the following two changes for the special order: 1) variable cost of goods sold will increase by $0.73 per unit, and 2) there will be no selling commissions. What will be the effect of these two changes on the special order profit?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started