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XYZ Company produces a single product and has the capacity to produce 85,000 units of this product each month. The per unit costs of this
XYZ Company produces a single product and has the capacity to produce 85,000 units of this product each month. The per unit costs of this product when 85,000 units are produced are shown below: ---- direct materials direct labor variable overhead fixed overhead variable selling costs fixed selling costs $29.60 24.10 18.30 17.20 11.80 14.70 The normal selling price of the product is $125 per unit. XYZ is currently selling 79,400 units of this product to regular customers. XYZ Company has just obtained a request for a special order of 14,000 units to be shipped at the end of the current month at a discounted price of $103 per unit. The variable selling costs would be reduced by 25% on the special order; however, the special order units will require an additional component part which will add $2 per unit to the direct material cost of the special order units. Calculate the amount of the decrease in company profits if XYZ Company accepts the special order. Do not put a minus sign in front of your
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