Near the end of 2020, X Company had produced and sold 63,600 units of its only product. Costs for these units were:

	Total	Per-Unit
Direct materials	$108,120	$1.70
Direct labor	82,680	1.30
Variable overhead	190,800	3.00
Fixed overhead	127,200	2.00
Variable selling and administration	76,320	1.20
Fixed selling and administration	63,600	1.00
Total	$648,720	$10.20

Just before the year ended, a company offered to buy 4,550 units for $13.80 each. X Company had the capacity to produce the additional 4,550 units, but because the special order product was slightly different than the regular product, direct material costs were expected to increase to $1.95 per unit, and some special equipment would have to be rented for a total of $19,000.

4. What would profit have been on the special order?

A: $6,331

B: $7,914

C: $9,892

D: $12,366

E: $15,457

F: $19,321

Tries 0/99

5. Assume that if X Company had accepted the special order, it would have had to lower the selling price of its regular product to prevent the loss of regular customers. The price of its regular product is normally set at 30% above total manufacturing cost per unit, but it would have to reduce it to $9.86 per unit. The effect of lowering the selling price would have been to decrease company profits by

A: $10,976

B: $14,598

C: $19,415

D: $25,823

E: $34,344

F: $45,678