The Young Company has gathered the following information for a unit of its most

Question

The Young Company has gathered the following information for a unit of its most popular product:

The above cost information is based on 11,400 units. A distributor has offered to buy 3,100 units at a price of $39 per unit. This special order would not disturb regular sales. Special packaging and other selling expenses would be an additional $0.50 per unit for the special order. If the special order is accepted, Young's operating profits will increase by:

$12,400.

$1,550.

$3,100.

$38,750.

Direct materials $ 12 Direct labor 6 Overhead (40% variable) 20 Cost to manufacture 38 Desired markup (50%) 19 Target selling price $ 57

Explanation / Answer

Income from special order = $38,750. Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Amount Revenue from specialorder = 3100*39               120,900.00 Less Costs: Direct materials = 12*3100                 37,200.00 Direct Labour = 6*3100                 18,600.00 Variable overhead = 3100*20*40%                 24,800.00 Special packaging and other selling expenses = 3100*.50                   1,550.00 Total costs                 82,150.00 Income from special order = 120,900 - 82,150                 38,750.00

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