Question
Excellent Manufacturers Inc. has a current production level of 20,000 units per month. Unit costs at this level are: Direct materials $0.26 Direct labor 0.40
Excellent Manufacturers Inc. has a current production level of 20,000 units per month. Unit costs at this level are:
Direct materials $0.26
Direct labor 0.40
Variable overhead 0.16
Fixed overhead 0.21
Marketing - fixed 0.25
Marketing/distribution - variable 0.42
Current monthly sales are 18,000 units. Jax Company has contacted Excellent about purchasing 1,550 units at $2.00 each. Current sales would NOT be affected by the one-time-only special order, and variable marketing/distribution costs would NOT be incurred on the special order. What is Ratzlaff Company's change in operating profits if the special order is accepted?
Operating profits will increasedecrease$465$1,503$1,829$2,124$4,929 by increasedecrease$465$1,503$1,829$2,124$4,929.
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