Question
Gleason manufactures a single product with the following full unit costs for 6,000 units: Direct Material $150 Direct Labor $80 Variable Overhead $148 Fixed Overhead
Gleason manufactures a single product with the following full unit costs for 6,000 units:
| Direct Material | $150 |
| Direct Labor | $80 |
| Variable Overhead | $148 |
| Fixed Overhead | $212 |
A company recently approached Gleason with a special order to purchase 1,000 units for $550. Gleason currently sells the models to dealers for $1,100. Capacity is sufficient to produce the extra 1,000 units.
Determine the impact on profit of accepting the order.
Gleason manufactures a single product with the following full unit costs for 6,000 units:
| Direct Material | $150 |
| Direct Labor | $80 |
| Variable Overhead | $148 |
| Fixed Overhead | $212 |
A company recently approached Gleason with a special order to purchase 1,000 units for $550. Gleason currently sells the models to dealers for $1,100. Capacity is sufficient to produce the extra 1,000 units.
Determine the impact on profit of accepting the order.
A) The company will earn $172,000 on the order
B) The company will lose $100,000 on the order
C) The company will earn $550,000 on the order
D)The company will lose $40,000 on the order
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