Question
Capitol has received a special order for 2,020 units of its product at a special price of $152. The product normally sells for $202 and
Capitol has received a special order for 2,020 units of its product at a special price of $152. The product normally sells for $202 and has the following manufacturing costs:
Per unit | |||
Direct materials | $ | 52 | |
Direct labor | 32 | ||
Variable manufacturing overhead | 22 | ||
Fixed manufacturing overhead | 42 | ||
Unit cost | $ | 148 | |
|
Assume that Capitol has sufficient capacity to fill the order without harming normal production and sales and all fixed overhead is unavoidable. a. If Capitol accepts the order, what effect will the order have on the companys short-term profit?
Increase/decrease in profit by: b. What minimum price should Capitol charge to achieve a $42,000 incremental profit? (Round your answer to 2 decimal places.)
Minimum price: c. Now assume Capitol is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Capitol accepts the order, what effect will the order have on the companys short-term profit?
Increase/Decrease in profit by:
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