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Carlsbad Enterprises has a capacity to produce 450,000 computer cases per year. The company is currently producing and selling 370,000 cases per year at a
Carlsbad Enterprises has a capacity to produce 450,000 computer cases per year. The company is currently producing and selling 370,000 cases per year at a selling price of $403 per case. The cost of producing and selling one case follows Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs $155 40 19 291 Total costs The company has received a special order for 30,000 cases at a price of $252 per case Because it does not have to pay a sales commission on the special order, the variable selling and administrative costs would be only $50 per case. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs $252 155 40 50 19 Net loss per case $ (12) Required a.Compute the differential profit/loss if the order is accepted.(Enter your answers in thousands of dollars.) Status Quo 370000 Units Alternative 400000 Units Difference Sales revenue Variable costs Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit
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