Item24

2.5points

Time Remaining 3 hours 34 minutes 20 seconds

03:34:20

eBookReferences

Check my workCheck My Work button is now enabled1

Item 24

Time Remaining 3 hours 34 minutes 20 seconds

03:34:20

TB Problem 7-123 (Algo) Poppy, Incorporated, has received a special order for...

Poppy, Incorporated, has received a special order for 1,000 units of its product at a special price of $227. The product currently sells 17,000 units for $310 and has the following manufacturing costs:

	Cost per Unit
Direct materials	$ 105
Direct labor	56
Variable manufacturing overhead	39
Fixed manufacturing overhead	19
Total unit cost	$ 219

Required:

Assume that Poppy has sufficient capacity to fill the order without harming normal production and sales.

If Poppy accepts the order, what effect will the order have on the company's short-term profit? For the next two questions, now assume that Poppy has sufficient capacity to fill 500 units of the order without harming normal sales.

If Poppy accepts the order and fills it completely, what effect will the order have on the company's short-term profit?

If Poppy accepts the special order, what average price should Poppy charge to make a $75,000 incremental profit?