Question
Near the end of 2020, X Company had produced 61,500 units of its only product and had sold them for $13.44 each. Per-unit costs were:
Near the end of 2020, X Company had produced 61,500 units of its only product and had sold them for $13.44 each. Per-unit costs were:
Direct materials | $2.00 |
Direct labor | 1.60 |
Variable overhead | 2.90 |
Fixed overhead | 1.90 |
Variable selling and administration | 1.20 |
Fixed selling and administration | 1.20 |
Total | $10.80 |
Just before the year ended, a company offered to buy 4,490 units at a price that was $1.22 less than the regular selling price. X Company had the capacity to produce the additional 4,490 units, but because the special order product was slightly different than the regular product, direct material costs were expected to increase to $2.15 per unit, and some special equipment would have to be rented for a total of $14,000.
What would profit have been on the special order?
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