At the end of the year, a company offered to buy 4,770 units of a product from X

Question

At the end of the year, a company offered to buy 4,770 units of a product from X Company for a special price of $11.00 each instead of the company's regular price of $18.00 each. The following information relates to the 70,000 units of the product that X Company made and sold to its regular customers during the year: Per-Unit Total Cost of goods sold $8.39 $587,300 Period costs 2.93 205,100 Total $11.32 $792,400 Fixed cost of goods sold for the year were $130,900, and fixed period costs were $102,900. Variable period costs include selling commissions equal to 2% of revenue.

5. Profit on the special order is 1548.72 Submit Answer Incorrect. Tries 2/5 Previous Tries

6. Assume the following two changes for the special order: 1) variable cost of goods sold will increase by $0.82 per unit, and 2) there will be no selling commissions. What will be the effect of these two changes on the special order profit?

Explanation / Answer

5 Units 4770 Special order Per unit Total Sales revenue 11 52470 Expense Cost of goods sold 8.39 40020.3 Period cost 2.93 13976.1 Total expense 11.32 53996.4 Net operating loss -1526.4 6 Units 4770 Special order Per unit Total Sales revenue 11 52470 Expense Cost of goods sold (8.39+.82) 9.21 43931.7 Period cost (2.93-.36) 2.57 12258.9 Total expense 11.78 56190.6 Net operating loss -3720.6 Selling commission = 2% * 18 0.36

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