Questions 5 and 6 refer to the following information: At the end of the year, a

Question

Questions 5 and 6 refer to the following information: At the end of the year, a company offered to buy instead of the com has already made and sold to its regular 4,550 units of a product from X Company for a special price of $12.00 each s regular price. The following information relates to the 66,700 units of the product that X Company customers: Total Revenue Cost of Goods Sold Per-Unit $18.00 $1,200,600 Variable Fixed 369,518 124,062 5.54 1.86 Selling and Administrative Costs Variable Fixed 72,703 80,707 553,610 1.09 1.21 $8.30 Profit The special order product has some unique features that will require additional material costs of $0.71 per unit and the rental of special equipment for $4,000. Bpts. Profit on the special order would be 5. A $17,203 BO $19,439 CO $21,967 DO $24,822 EO $28,049 FO 831,69 8 pts. The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with emand falling by 950 units. This loss in sales will cause firm profits to fall by 6. AO $8,121 BO $10,802 CO $14,366 DO $19,107 EO $25,412 FO $33,798 8pt The following information is for X Companv's two products. A and B

Explanation / Answer

CALCULATION OF THE PROFIT ON THE SALE OF SPECIAL ORDER Units Rate Amount Sales Revenue 4550 $                   12.00 $          54,600.00 Less : Variable Cost of Goods Sold 4550 $                      5.54 $          25,207.00 Less: Selling and Administrative Cost 4550 $                      1.09 $             4,959.50 Less: addittional Material cost 4550 $                      0.71 $             3,230.50 Less: Rental Equipment $             4,000.00 $          17,203.00 Answer = Option A = $ 17,203 Answer = CALCULATION OF THE LOSS IF THE SPECIAL ORDER ACCEPTED Revenue 65750 $                   18.00 $          11,83,500 Less: Variable Cost of Goods Sold 65750 $                      5.54 $             3,64,255 Less: Selling and Administrative Cost 65750 $                      1.09 $                71,668 Less: Fixed Cost Fixed Cost of Goods sold $             1,24,062 Fixed Cost of Selling and administrative Expenses $                80,707 Net Revenue with 65,750 Units $             5,42,809 Net Revenue with 66,700 units $             5,53,610 Loss from the accepting $               -10,802 Answer = Option B = 10,802

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