Delta Company produces a single product. The cost of producing and selling a sin

Question

Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company’s normal activity level of 105,600 units per year is:

The normal selling price is $22 per unit. The company’s capacity is 127,200 units per year. An order has been received from a mail-order house for 1,800 units at a special price of $19.00 per unit. This order would not affect regular sales.

If the order is accepted, by how much will annual profits be increased or decreased? (The order will not change the company’s total fixed costs.)

   

Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company’s normal activity level of 105,600 units per year is:

Explanation / Answer

If the order is accepted, by how much will annual profits be increased or decreased

Incremental revenue (1800*19) 34200 Incremental cost Direct material (1800*2.2) -3960 Direct labour (1800*3) -5400 Variable manufacturing overhead (1800*.70) -1260 Variable selling and administrative expenses (1800*1.20) -2160 Total incremental cost -12780 Incremental profit 21420

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.