Question
Raven Co. expects to sell 100,000 units of its product in the next period with the following results: Sales (100,000 units) $2,000,000; Direct materials $300,000;
Raven Co. expects to sell 100,000 units of its product in the next period with the following results: Sales (100,000 units) $2,000,000; Direct materials $300,000; Direct labor $500,000; Overhead $420,000 (one-third variable & two-thirds fixed); Selling expenses $250,000; Administrative expenses $400,000. Farrow has an opportunity to sell 25,000 additional units at $18 per unit. The additional sales would not affect its current expected sales. Costs for the special order are estimated as: Direct materials per unit - no change; Labor costs per unit would increase by 25% due to the use of some overtime; variable overhead per unit - no change; fixed overhead - 20% increase; sales expenses - no change; and administrative expenses - an increase of $40,000. What is the total expected profit for regular sales?
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