Personali Company maufactures and selis 900 widgets per year Personal has produc

Question

Personali Company maufactures and selis 900 widgets per year Personal has production capacity of 110000 widgnts. The oost of bulding and seling a widget is computed as folows (for fixed costs, the per unit rate is based on the current sales and production levely 531 $23 Direct materials. Direct labor Variable manufacturing overhead $10 Fixed manufacturing overhead... $5 Fixed selling oosts.S4 Personali normally sells the widget 150% of tho total cost inctuding selling oosts A new o stomer wans to place a one time on er so sooo widgets at sea oo each No oome ssons sous apply to the special order However, Parsonali will need to pay a one-Sime fee of $800 for a specialicerse to do business in the customer's country What is the regular selling price of one widget By now much wil Pomonal's Compan inc o ne change if it decides to aooepe the specia order? ave mtho amount with a negative s n neome would decrease input at the a income would increase input o i ncome would not change (Round any per unit amounts n nem eda y computatons and hal anses to the nearest penny when needed ount

Explanation / Answer

1. Regular selling price of ONE widget = ($ 31+23+10+5+4) = $ 73

$ 73*150%= $ 109.5

2. As the personal company sells the widgets at 150% of total cost there would be an increase in the income of the company due to acceptance of the new order ie cost to manufacture =( 8000*$ 68 +800=$ 544800 ) and the relative selling price would be (8000*73=584000) incrase in income is $ 39200

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