Questions 4 and 5 refer to the following information:

Near the end of 2020, X Company had produced and sold 62,000 units of its only product. Costs for these units were:

	Total	Per-Unit
Direct materials	$130,200	$2.10
Direct labor	99,200	1.60
Variable overhead	186,000	3.00
Fixed overhead	124,000	2.00
Variable selling and administration	82,460	1.33
Fixed selling and administration	74,400	1.20
Total	$696,260	$11.23

Just before the year ended, a company offered to buy 4,840 units for $14.08 each. X Company had the capacity to produce the additional 4,840 units, but because the special order product was slightly different than the regular product, direct material costs were expected to increase by $0.20 per unit, and some special equipment would have to be rented for a total of $14,000.

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

$14,314

You are correct. Your receipt no. is 156-228

Previous Tries

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 20% above total manufacturing cost per unit, but it would have to reduce it to $9.95 per unit. The effect of lowering the selling price would have been to decrease company profits by