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Help please, struggling and desperately do not understand. Question 1: Special order Sales volume in units 110 Revenue $8,800 Variable costs $2,200 Contribution margin $6,600
Help please, struggling and desperately do not understand.
Question 1: Special order Sales volume in units 110 Revenue $8,800 Variable costs $2,200 Contribution margin $6,600 Fixed costs $1,600 Profit $5,000 Special order: A client wants to buy 30 units at a discounted price of $40 per unit. This is a one-time deal (i.e., a short-term decision). You have enough spare capacity to fulfill this special order without cutting back on your regular sales. a) Use the gross approach to decide whether you should take the special order: status quo (no special total amounts after adding order) the special order Revenue $8,800 Variable costs $2,200 Contribution margin $6,600 Fixed costs $1,600 Profit $5,000 Should you take the special order? Why? O NO -- the low price for the special order reduces the contribution margin O YES -- the profit is positive with the special order OYES -- the profit is higher with the special order b) Use the incremental approach to decide whether you should take the special order. how much each amount changes after adding the special order revenue Question 1: Special order Sales volume in units 110 Revenue $8,800 Variable costs $2,200 Contribution margin $6,600 Fixed costs $1,600 Profit $5,000 Special order: A client wants to buy 30 units at a discounted price of $40 per unit. This is a one-time deal (i.e., a short-term decision). You have enough spare capacity to fulfill this special order without cutting back on your regular sales. a) Use the gross approach to decide whether you should take the special order: status quo (no special total amounts after adding order) the special order Revenue $8,800 Variable costs $2,200 Contribution margin $6,600 Fixed costs $1,600 Profit $5,000 Should you take the special order? Why? O NO -- the low price for the special order reduces the contribution margin O YES -- the profit is positive with the special order OYES -- the profit is higher with the special order b) Use the incremental approach to decide whether you should take the special order. how much each amount changes after adding the special order revenue
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