Replica Products $($RP$)$ manufactures miniature models of airplanes, trains and automobiles as promotional items for corporate customers. A newly formed airline has approached RP to make $500$ models of its new livery $($logo design$)$ on a model Boeing $737,$ which it will send to travel agencies to serve as a marketing tool. RPs current per unit cost on Boeing $737$ models is direct materials $$7$; direct labour $$7$; variable manufacturing overhead $$2\mathrm{.}50$; fixed manufacturing overhead $$5\mathrm{.}00.$ Such models are normally priced at $$31\mathrm{.}00/$unit$.$ Incorporating the new airline$$s livery into the production will require an additional cost of $$670.$ As the newly formed airline is rather cash poor, it is asking RP to make this one$-$time production run for $$27/$unit$.$ Assuming RP has the capacity and other orders would not be affected, how much total profit would RP earn from this special order?

Question $8$Answer

a$.$

$$2,080$

b$.$

$$4,580$

c$.$

$$5,900$

d$.$

$$5,250$