Question
Bergeron Corp. produces high-end pens (the pens include a hand-carved wooden handle). They currently produce 20,000 pens per week, although they have the capacity to
Bergeron Corp. produces high-end pens (the pens include a hand-carved wooden handle). They currently produce 20,000 pens per week, although they have the capacity to produce 23,000 pens per week. Manufacturing costs per unit are as follows:
Direct Materials | $1.42 |
Direct Labor | $3.18 |
Variable MOH | $0.91 |
Fixed MOH | $2.23 |
The pens sell for $11.15 per unit. There are no other fixed or variable costs associated with production and sale of these pens.
A customer has asked for a custom order of 6,000 pens per week at a price of $8.47 per pen. The special order requires a custom logo, which would add a new fixed cost of $561 per week.
How much would weekly operating profit change if Bergeron accepts the special order? Indicate an increase in profit as a positive number, and a decrease in profit as a negative number.
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