Questions 5 and 6 refer to the following information: At the end of the year, a
ID: 2510945 • Letter: Q
Question
Questions 5 and 6 refer to the following information:
At the end of the year, a company offered to buy 4,630 units of a product from X Company for a special price of $11.00 each instead of the company's regular price. The following information relates to the 60,700 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 $0.85 per unit and the rental of special equipment for $3,000.
5. Profit on the special order would be
6. The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with demand falling by 650 units. This loss in sales will cause firm profits to fall by
Total Per-Unit Revenue $1,153,300 $19.00 Cost of Goods Sold Variable 355,095 5.85 Fixed 121,400 2.00 Selling and Administrative Costs Variable 63,128 1.04 Fixed 80,124 1.32 Profit $533,553 $8.79Explanation / Answer
5)Profit=sales-cost of goods sold-selling and admin expenses-rental equipment
=(4630*11)-(4630*(5.85+0.85))-(4630*1.04)-3000
=12093.80
6)Loss in sales and profit by
=(650*19)-(650*5.85)-(650*1.04)=7871.50
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.