Question
This assignment is due soon, I want to check my answers before I submit them. Please make sure to answer within 0.5 to 2 hours.
This assignment is due soon, I want to check my answers before I submit them. Please make sure to answer within 0.5 to 2 hours. Please submit what you have within 2 hours, or this question is wasted and will be thumbed down. Thank you for your help in advance!
Glen Inc. has been approached by a customer who wishes to purchase 4,000 units of its product for $45.00. The customer requires delivery within a month.
Glen Inc has the capacity to produce 34,000 units each month and currently has 600 units of finished goods inventory in stock. For the upcoming month, sales to regular customers are expected to be 32,000 units.
The regular selling price is $70.00 per unit. The gross profit per unit is $24.00 and regular selling and administrative cost is $16.00 per unit.
Further analysis reveals that the variable manufacturing costs per unit are $30.00 and variable selling costs are $15.00 per unit. Because of the nature of the special order, selling costs will be reduced to $6.00 per unit.
What would be the impact to Glen Inc's operating income if the company accepts the special order of 5,000 units? (12 marks)
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