Question
Questions 6, 7, and 8 refer to the following information At the end of the year, a company offered to buy 4,790 units of a
Questions 6, 7, and 8 refer to the following information
At the end of the year, a company offered to buy 4,790 units of a product from X Company for a special price of $11.00 each instead of the company's regular price of $19.00 each. The following information relates to the 64,700 units of the product that X Company made and sold to its regular customers during the year:
Revenue | $1,229,300 | ||
Cost of goods sold | 534,422 | ||
Selling and administrative costs | 167,573 | ||
Profit | $527,305 |
Fixed cost of goods sold for the year was $120,342, and fixed selling and administrative costs were $93,815. 6. Profit on the special order is
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7. Consider the following three changes. Direct material costs on the special order will increase by $0.86 per unit, direct labor costs on the special order will decrease by $0.39 per unit, and X Company will have to rent special equipment for $1,000. The effect of these changes will be to reduce profit on the special order by
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8. The marketing manager thinks that all of X Company's regular customers can be retained if the regular selling price is reduced by $0.54. If next year's unit sales turn out to be the same as this year's, the effect of reducing the regular selling price will be to decrease X Company's profits by
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