Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 1. (special order) You sell high-quality fake IDs to college students at a regular price of $50. Your financial results for 20X9 are summarized
Question 1. (special order) You sell high-quality fake IDs to college students at a regular price of $50. Your financial results for 20X9 are summarized in the following contribution margin statement: 20x9 Sales volume (#units) 90 Revenue $4,500 Variable costs $1,800 Contribution margin $2,700 Fixed costs $1,350 Profit $1,350 Special order: You have been approached by a client who wants to buy 25 units at a discounted price of $30 per unit. You have enough spare capacity to fulfill this special order without cutting back on your regular business (90 units at $50). Required: 1. Compute total profit with the special order (total for the regular business plus the special order). To do that, compute total revenue, costs, etc with special order: Total revenue=$ Total VC=$ Total CM=$ Total FC=$ Profit = $ 2. Make a decision based on total profits with and without the special order. Should you take this special order? (enter 1 if yes, 2 if no)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started