Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwi

Question

Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 18,000 cases of sauce each year but is currently only manufacturing and selling 16,600. The following costs relate to annual operations at 16,600 cases: Gwinnett normally sells its sauce for $50 per case. A local school district is interested in purchasing Gwinnett's excess capacity of 1,400 eases of sauce but only if they can get the sauce for $25 per case. This special order would not affect regular sales or total fixed costs or variable costs per unit. If this special order is accepted. Gwinnett's profits for the year will: Frodic Corporation has budgeted sales and production over the next quarter as follows: The company has 4,600 units of product on hand at July 1, 10% of the next month's sales in units should be on hand at the end of each month. October sales are expected to be 74,500 units. Budgeted sales for September would be (in units);

Explanation / Answer

Net Profit will decrease by 2800

2)

Particulars Reject Order Accept Order Net Income Increase/(Decrease) Units Sold 16600 18000 Sales 415000 450000 35000 Variable manufacturing Cost 365200 396000 30800 Variable selling and administrative cost 83000 90000 7000 Fixed manufacturing cost 62000 62000 0 Fixed selling and administrative cost 44000 44000 0 Net Profit -139200 -142000 -2800

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