Question
Franco, Inc., produces dental office examination chairs. Franco has the capacity to produce 9,000 chairs per year and currently is producing 6,000. Each chair retails
Franco, Inc., produces dental office examination chairs. Franco has the capacity to produce 9,000 chairs per year and currently is producing 6,000. Each chair retails for $13,000, and the costs to produce a single chair consist of direct materials of $3,000, direct labor of $3,000, and variable overhead of $1,000. Fixed overhead costs of $1,000,000 are met by selling the first 4,000 chairs. Franco has received a special order from Ghanem, Inc., to buy 700. Each chair is sold for $12,000 (selling price of one chair). There are no additional costs needed for this special order. What is the contribution margin for the special order?
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