At the end of the year, a company offered to buy 4,340 units of a product from X

Question

At the end of the year, a company offered to buy 4,340 units of a product from X Company for a special price of $11.00 each instead of the company's regular price of $17.00 each. The following information relates to the 66,500 units of the product that X Company has already made and sold to its regular customers: The special order product has some unique features that will require additional material costs of $0.76 per unit and the rental of special equipment for $2,000. Profit on the special order would be [ONLY TWO TRIES] 6. The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with demand falling by 600 units. The effect of this loss of sales will be to decrease firm profits by

Explanation / Answer

Answer:5

Answer:6

Profit decrease by (10152-8472)=1680.

Revenue 11 Less: Additional material cost 0.76 Variable cogs 6.22 Variable selling & administrative costs 1.22 Income per unit 2.8 Income (4340*2.8) 12152 Less: Rental of the special equipment 2000 Profit on special order 10152

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