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The Parton Company has gathered the following information for a unit of it's most popular product: Direct Materials: $20 Direct Labor: $15 Overhead (60% variable):

The Parton Company has gathered the following information for a unit of it's most popular product:

Direct Materials: $20

Direct Labor: $15

Overhead (60% variable): $20

Cost to Manufacture: $55

The above cost information is based on 10,000 units. Parton currently sells 8,500 units for $62 per unit. A distributor has offered to buy 1,000 units at a price of $50 per uni. This special order would not disturb regular sales.

Required:

A) Calculate Parton's change in operating profits if the special order is accepted.

B) How many units of regular sales could be lost before this contract is not profitable?

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