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Please help me solve this problem Company Daffodil, which manufactures and sells a single widget, is currently producing and selling 102,000 widgets per month, which
Please help me solve this problem
Company Daffodil, which manufactures and sells a single widget, is currently producing and selling 102,000 widgets per month, which represents 25% of its full capacity. Total monthly costs are RUB 619,000 but at full capacity these would be RUB 700,000 . Total fixed costs would remain unchanged at all activity levels up to full capacity. The normal selling price of the product results in a C/S ratio of 40%. A new customer has offered to take a monthly delivery of 15,000 widgets at a price per unit 20% below the normal selling price. If this new business is accepted, existing sales are expected to fall by one widget for every six units sold to this new customer. Required: (a) Using high-low method for the current production and sales level, calculate: (i) the variable cost per unit; (ii) the total monthly fixed costs; (iii) the selling price per unit; (iv) the contribution per unit. (b) Calculate the net increase or decrease in monthly profit which would result from acceptance of the new business Step by Step Solution
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