Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

Brike Company, which manufactures one product - robes, has enough idle capacity available to accept a special order of 10,000 robes at $9 a

Brike Company, which manufactures one product - robes, has enough idle capacity available to accept a special order of 10,000 

Brike Company, which manufactures one product - robes, has enough idle capacity available to accept a special order of 10,000 robes at $9 a robe. A predicted income statement for the year, without this special order is as follows: Sales revenue $12.50 $1,250,000 Manufacturing costs: Variable 6.25 625,000 Fixed 1.75 175,000 8.00 800,000 Gross profit 4.50 450,000 Marketing costs: Variable 1.80 180,000 Fixed 1.45 145,000 3.25 325,000 Operating profit $ 1.25 $ 125,000 If the order is accepted, variable marketing costs on the special order would be reduced 25 percent because all of the robes would be packed and shipped in one lot. However, if the offer is accepted, management estimates that it will lose the sale of 2,000 robes at regular prices. What is the net gain or loss from the special order?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Unit variable marketing cost 18075 135 If special order is accep... blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Cost Accounting

Authors: William Lanen, Shannon Anderson, Michael Maher

5th edition

978-1259728877, 1259728870, 978-1259565403

More Books

Students explore these related Accounting questions