Questions 5 and 6 refer to the following information At the end of the year, a c
ID: 2574127 • Letter: Q
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Questions 5 and 6 refer to the following information 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: Cost of goods sold Period costs Total Per-Unit $8.39 2.93 Total $587,300 205,100 $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 se in commissions equal to 2% of revenue. 5. Profit on the special order is 1526.4 Submit Answer Incorrect. Tries 4/5 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? -3720.6 Submit Answer Incorrect. Tries 2/5 Previous TriesExplanation / Answer
For 70,000 units:
Cost of Goods Sold = $587,300
Fixed Cost of Goods Sold = $130,900
Variable Cost of Goods Sold = $456,400
Period Costs = $205,100
Fixed Period Costs = $102,900
Variable Period Costs = $102,200
Total Variable Costs = Variable Cost of Goods Sold + Variable Period Costs
Total Variable Costs = $456,400 + $102,200
Total Variable Costs = $558,600
Variable Costs per unit = $558,600 / 70,000
Variable Costs per unit = $7.98
Sales Commission = 2% * Selling Price
Sales Commission = 2% * $18.00
Sales Commission = $0.36
Answer 5.
Under Special Order:
Selling Price = $11.00
Variable Costs per unit = $7.98 - $0.36
Variable Costs per unit = $7.62
Number of units sold = 4,770
Total Profit on the Special Order = (Selling Price - Variable Costs per unit) * Number of units sold
Total Profit on the Special Order = ($11.00 - $7.62) * 4,770
Total Profit on the Special Order = $16,122.60
Answer 6.
Under Special Order:
Selling Price = $11.00
Variable Costs per unit = $7.98 - $0.36 + $0.82
Variable Costs per unit = $8.44
Number of units sold = 4,770
Total Profit on the Special Order = (Selling Price - Variable Costs per unit) * Number of units sold
Total Profit on the Special Order = ($11.00 - $8.44) * 4,770
Total Profit on the Special Order = $12,211.20
So, Profit on Special Order will decrease by $3,901.40
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