_ c o ezto.mheducation.com/hm.tpx Goo Capitol has received a special order for 2

Question

_ c o ezto.mheducation.com/hm.tpx Goo Capitol has received a special order for 2,020 units of its product at a special price of $152. The product normally sells for $202 and has the following manufacturing costs Per unit $ 52 32 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 42 Unit cost Assume that Capitol has sufticient capacity to fill the order without harming normal production and sales and all fixed overhead is unavoidable a. If Capitol accepts the order, what effect will the order have on the company's short-term profit? b. What minimum price shoukd Capitol charge to achieve a s42.000 incremental profit? (Round your answer to 2 decimal places.) inimum Price

Explanation / Answer

Variable costs per unit= 52+32+22=106 a Increase in short-term profit = 2020*(152-106)= 92920 b Minimum price = 106+(42000/2020)= 126.79 c Decrease in short-term profit = 2020*(202-152)= 101000

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