B. The marketing manager thinks that if X company accepts the special order, reg
ID: 2511187 • Letter: B
Question
B. The marketing manager thinks that if X company accepts the special order, regular customers will be lost, with demand falling by 600 units. The loss in sales will cause firm profits to fall by ____________ information: At the end of the year, a company offered to buy 4,960 units of a product from X Company for a special price of $12.00 each instead of the company's regular price The following information relates to the 64,600 units of the product that X Company has already made and sold to its regular customers: Per- Unit Total Revenue Cost of Goods Sold $1,227,400 $19.00 408,272 6.32 137,598 2.13 Variable Fixed Selling and Administrative Costs 89,794 1.39 6Z,830 1.05 $523,906 $8.11 Variable Fixed Profit The special order product has some unique features that will require additional material costs of $0.73 per unit and the rental of special equipment for $3,500 5. Profit on the special order would be Submit AnswerTries 0/3
Explanation / Answer
Answer =A) CALCULATION OF ADDITTIONAL REVENUE FROM THE ACCEPTING THE ORDER Revenue = (4960 units X $12) $ 59,520 Less: Variable Cost (4960 units X$ 6.32) $ 31,347 Addittional material Cost (4960 X $ 0.73) $ 3,621 Less: Addittional rental for sprecial equipment $ 3,500 Profit on special order = $ 21,052 Answer =B) CALCULATION OF THE NET REVENUE FROM WITH FALLING IN DEMAND 600 UNITS Units Per unit Total Revenue 64,000 $ 19 $ 12,16,000 Less: Cost of Goods Sold Variable 64,000 $ 6.32 $ 4,04,480 Less: Fixed Cost $ 1,37,598 Contribution $ 6,73,922 Less: Selling and administration cost Variable 64,000 $ 1.39 $ 88,960 Less: Fixed Cost $ 67,830 Profit $ 5,17,132 Profit with Sales 64,600 units = $ 5,23,906 Net Loss in profit $ 6,774 So by accepting the special thre is loss of $ 6,774
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.