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At the end of the year, a company offered to buy 4,790 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 4,790 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 61,100 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 $1,099,800 539,513 $560,287 139,919 $420,368 For the year, variable cost of goods sold were $408,759, and variable selling and administrative costs were $78,208. The special order product has some unique features that will require additional material costs of $0.90 per unit and the rental of special equipment for $4,500. 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 $0.20. The effect of reducing the selling price will be to decrease firm profits by Submit Answer Tries 0/3
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