Cuddly Toys makes a large teddy bear that currently sells for $62 per bear. At a production
Fantastic news! We've Found the answer you've been seeking!
Question:
Cuddly Toys makes a large teddy bear that currently sells for $62 per bear. At a production level of 20,000 bears per year, the bears have a total unit cost of $50 per bear. The total unit cost is comprised of variable cost of $45 per bear & fixed cost of $5 per bear (or total fixed costs of $100,000/20,0000 bears). Cuddly Toys has excess capacity to manufacture 15,000 more bears. The company has been approached by a new customer, who wants to buy 5,000 large bears for $47 apiece. What is the effect on operating profit if the special order is accepted?
A. $15,000 decrease to operating profit
B None of these
C $10,000 increase to operating profit
D $10,000 decrease to operating profit
$15,000 increase to operating profit
Posted Date: