barbecue sauce corporation manufactures a specialty barbecue sauce. gwinnelt bas

ID: 2466390 • Letter: B

Question

barbecue sauce corporation manufactures a specialty barbecue sauce. gwinnelt bas the capacity to manufacture and sell 10,000 cases of sauce each year but is currently only manufacturing and selling 9,000. to manufacture and sell 10,000 cases of sauce each year but is currently only manufacturing and selling 9,000. the following costs relate to annual operations at 9,000 cases: Gwinnelt normally sells is square for 530 per case. a local school district is interested in purchasing gwinners excess capacity of 1,000 cases of sauce but only if they can get the sauce for $15 per case. this special order would not affect regular sales of total fixed costs or variable costs per unit, if this special order is accepted, gwinnet's profits for the year will:

Explanation / Answer

11) Cost of buying ( $21)

Savings in cost

Direct materials 10

Direct labor 7

Variable overhead 1

Fixed overhead 6

Savings 3 advantage

12) total variable cost

Variable manufacturing cost

$126,000

14 per unit

Variable selling

18,000

2 per unit

Total

144,000

16 per unit

Decrease in profit ($15 - $16) 1000 = $1,000