Walnut has received a special order for 2,500 units of its product at a special
ID: 2430620 • Letter: W
Question
Walnut has received a special order for 2,500 units of its product at a special price of $170. The product normally sells for $210 and has the following manufacturing costs: Per unit Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $ 62 30 40 75 $ 207 Unit cost Walnut is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Walnut accepts the order, what effect will the order have on the company's short-term profit? $92,500 increase Zero O $100,000 decrease O $92,500 decreaseExplanation / Answer
Answer:
Decrease in the profit by $100,000
Working notes for the above answer is as under
Decrease in the profit
=Change in selling price* unit sold
=(210-170)*2500
=40*2500
=$100,000
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