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... The Dubs Division of East Company (the parent company) produces wheels for off-road sport vehicles. Dubs has two products, 1 and 2. The two
... The Dubs Division of East Company (the parent company) produces wheels for off-road sport vehicles. Dubs has two products, 1 and 2. The two products only differ in how they are marketed. Product 1 is sold in bulk to customizing shops, while Product 2 is sold directly to consumers. Dub's estimated operating data for the year follows. * Product 1 - Product 2 Sales Price $300 each $400 each Var Mfg $51 each ......... $51 each Var GGA $40 each.. .... $72 each Fixed Mfg $50,000 ... . . $50,000 Fixed G&A $60,000 $80,000 Unless otherwise stated assume the fixed costs given above are allocated costs and unavoidable. Assume the Dubs division currently has excess production capacity and can only sell 1,000 units of p1 and 1,000 units of P2. How much would profits increase if it accepted a special order to sell 500 units to a discount automotive parts supplier for $250 each? The special order could be filled at the same variable manufacturing cost per unit as current production. Further, the special order would not reduce the volume of regular sales. Dubs would not incur its normal Variable General and Administrative costs on the special order but rather they estimate these costs to be $50 per wheel with an incremental fixed cost of $14100 to cover order processing. Round to the Nearest $1.00. If the special order decreases profits use a negative number, 2.g. 2000. wers Save
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