Question
Capitol has received a special order for 2,080 units of its product at a special price of $158. The product normally sells for $208 and
Capitol has received a special order for 2,080 units of its product at a special price of $158. The product normally sells for $208 and has the following manufacturing costs: Per unit Direct materials $ 58 Direct labor 38 Variable manufacturing overhead 28 Fixed manufacturing overhead 48 Unit cost 172 Assume that Capitol has sufficient capacity to fill the order without harming normal production and sales and all fixed overhead is unavoidable. a. If Capital accepts the order, what effect will the order have on the companys short-term profit? b. What minimum price should Capital charge to achieve a $48,000 incremental profit? (Round your answer to 2 decimal places.) c. Now assume Capital 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?
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