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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 $18.00 each. The following income statement is for the 69,900 units of the product that X Company has already made and sold to its regular customers: Sales Cost of goods sold Gross margin Selling and administrative costs Profit $1,258,200 606,732 $651,468 184,536 $466,932 For the year, fixed cost of goods sold were $125,820, and fixed selling and administrative costs were $90, 171. The special order product has some unique features that will require additional material costs of $0.79 per unit and the rental of special equipment for $4,000. 4. Profit on the special order would be Submit Answer Tries 0/3 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 Submit Answer Tries 0/3
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