Question
X Company produces 68,800 units of its regular product each year and sells each one for $13.00. The following cost information is available: Total Per-Unit
X Company produces 68,800 units of its regular product each year and sells each one for $13.00. The following cost information is available:
Total | Per-Unit | |
Direct materials | $145,168 | $2.11 |
Direct labor | 116,960 | 1.70 |
Variable overhead | 221,536 | 3.22 |
Fixed overhead | 149,984 | 2.18 |
Variable selling | 90,816 | 1.32 |
Fixed selling | 86,000 | 1.25 |
Total | $810,464 | $11.78 |
A company has offered to buy 4,160 units for $13.45 each. Because the special order product is slightly different than the regular product, direct material costs will increase by $0.20 per unit, and some special equipment will have to be rented for a total of $17,000.
1. What would profit on the special order be?
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2. Assume that if X Company accepts the special order, regular sales would fall to 67,700 units. The effect of this fall in regular sales would be to decrease company profit by
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