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Luxe Industries has an annual plant capacity of 65,000 units; current production is 53,000 units per year. At the current production volume, the variable cost
Luxe Industries has an annual plant capacity of 65,000 units; current production is 53,000 units per year. At the current production volume, the variable cost per unit is $25.00 and the fixed cost per unit is $4.20. The normal selling price of Luxe's product is $44.00 per unit. Luxe has been asked by Dexter Company to fill a special order for 8,000 units of the product at a special sales price of $23.00 per unit. Dexter is located in a foreign country where Luxe does not currently operate. Dexter will market the units in its country under its own brand name, so the special order is not expected to have any effect on Luxe's regular sales. Read the requirements. Requirement 1. How would accepting the special order impact Luxe's operating income? Should Luxe accept the special order? The special order will Luxe's operating income by $ accept the special sales order. Thus, Luxe Requirement 2. How would your analysis change if the special order sales price were to be $36.00 per unit and Luxe would have to pay an attorney a fee of $18,000 to make sure it is complying with export laws and regulations relating to the special order? Under these new assumptions, the special order will accept the special sales order. Luxe's operating income by $ Thus, Luxe Requirements 1. How would accepting the special order impact Luxe's operating income? Should Luxe accept the special order? 2. How would your analysis change if the special order sales price were to be $36.00 per unit and Luxe would have to pay an attorney a fee of $18,000 to make sure it is complying with export laws and regulations relating to the special order
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