Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Last year, X Company sold 63,900 units of its only product for $17.00 each. Total costs were as follows: Cost of goods sold Variable $417,267

Last year, X Company sold 63,900 units of its only product for $17.00 each. Total costs were as follows:

Cost of goods sold
Variable $417,267
Fixed 119,493
Selling and administrative
Variable $68,373
Fixed 88,821

At the end of the year, a company offered to buy 4,530 units of the product for $12.00 each instead of $17.00. X Company's production manager thought that the special order units would probably require additional variable costs per unit of $1.01 and the rental of special equipment for $1,500. X Company had the capacity to produce the additional units, and there would have been no selling and administrative costs for the special order. But X Company still rejected the order. If X Company had accepted the special order, firm profits would have increased by $18,704

There was concern that regular customers would have found out about the special order, and X Company's regular sales this year would have fallen by 950 units. The result of these lost sales would have been to reduce X Company's profits this year by___

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Harrison, Horngren, Thomas

1st Edition

0558823513, 978-0558823511

More Books

Students also viewed these Accounting questions

Question

consider how qualitative data can add value to your research;

Answered: 1 week ago

Question

consider the use of electronically obtained qualitative data;

Answered: 1 week ago