Near the end of 2020, X Company had produced and sold 67,500 units of its only product.

Costs for these units were:

Total Per-Unit

Direct materials $186,754 $2.50

Direct labor 70,450 1.10

Variable

overhead 181,980 3.70

Fixed overhead 164,060 1.89

Variable selling

and

administration

78,294 1.27

Fixed selling and

administration 94,890 1.10

Total $776,428 $11.56

Just before the year ended, a company offered to buy 4,620 units for $14.18 each. X

Company had the capacity to produce the additional 4,620 units, but because the special

order product was slightly different than the regular product, direct material costs were

expected to increase to $2.50 per unit, and some special equipment would have to be

rented for a total of $17,000.

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

Tries 0/5

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 $10.02 per unit. The effect of lowering the selling price would have

been to decrease company profits by