Question
Questions 4 and 5 refer to the following information : Near the end of 2020, X Company had produced and sold 66,500 units of its
Questions 4 and 5 refer to the following information:
Near the end of 2020, X Company had produced and sold 66,500 units of its only product. Costs for these units were:
Total | Per-Unit | |
Direct materials | $152,950 | $2.30 |
Direct labor | 86,450 | 1.30 |
Variable overhead | 199,500 | 3.00 |
Fixed overhead | 146,300 | 2.20 |
Variable selling and administration | 92,435 | 1.39 |
Fixed selling and administration | 66,500 | 1.00 |
Total | $744,135 | $11.19 |
Just before the year ended, a company offered to buy 4,580 units for $14.21 each. X Company had the capacity to produce the additional 4,580 units, but because the special order product was slightly different than the regular product, direct material costs were expected to increase by $0.10 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?
$11,030
You are correct. Your receipt no. is 156-1342 | 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 $9.96 per unit. The effect of lowering the selling price would have been to decrease company profits by
Tries 0/5 |
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