Question
At the end of the year, a company offered to buy 4,630 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 4,630 units of a product from X Company for a special price of $12.00 each instead of the company's regular price. The following information relates to the 60,800 units of the product that X Company has already made and sold to its regular customers:
Total | Per-Unit | |||
Revenue | $1,033,600 | $17.00 | ||
Cost of Goods Sold | ||||
Variable | 396,416 | 6.52 | ||
Fixed | 122,816 | 2.02 | ||
Selling and Administrative Costs | ||||
Variable | 75,392 | 1.24 | ||
Fixed | 74,784 | 1.23 | ||
Profit | $364,192 | $5.99 |
The special order product has some unique features that will require additional material costs of $0.80 per unit and the rental of special equipment for $2,500. 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, with demand falling by 700 units. This loss in sales will cause firm profits to fall by _____
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