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Gleeson manufactures a single product with the following full unit costs for 6,000 units: Direct materials $160 Direct labor 80 Manufacturing overhead (40% variable) 240
Gleeson manufactures a single product with the following full unit costs for 6,000 units: Direct materials $160 Direct labor 80 Manufacturing overhead (40% variable) 240 Selling expenses (60% variable) 80 Administrative expenses (10% variable) 40 Total per unit $600 A company recently approached Gleeson with a special order to purchase 1,000 units for $575 Gleeson currently sells the models to dealers for $1, 100. Capacity is sufficient to produce the extra 1,000 units. No selling expenses would be incurred on the special order. Required: a. Ignoring the special order, create a contribution margin income statement that shows the operating profit of the 600 units Gleeson currently sells b. Determine the impact on profit of accepting the order Should Gleeson accept the special order? c. Determine the minimum price Gleeson would want to increase before tax profits by $30,000 on the special order
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