Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Cranberry has received a special order for 140 units of its product at a special price of $2,000. The product normally sells for $2,500 and
Cranberry has received a special order for 140 units of its product at a special price of $2,000. The product normally sells for $2,500 and has the following manufacturing costs:
Per unit | |||
Direct materials | $ | 700 | |
Direct labor | 400 | ||
Variable manufacturing overhead | 500 | ||
Fixed manufacturing overhead | 600 | ||
Unit cost | $ | 2,200 | |
Assume that Cranberry has sufficient capacity to fill the order without harming normal production and sales. If Cranberry accepts the order, what effect will the order have on the companys short-term profit?
$28,000 decrease
$56,000 increase
$28,000 increase
$84,000 decrease
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started