At the end of the year, a company offered to buy 4,570 units of a product from X
ID: 2574182 • Letter: A
Question
At the end of the year, a company offered to buy 4,570 units of a product from X Company for a special price of $11.00 each instead of the company's regular price of $17.00 each. The following information relates to the 67,100 units of the product that X Company made and sold to its regular customers during the year:
Fixed cost of goods sold for the year were $122,122, and fixed period costs were $91,256. Variable period costs include selling commissions equal to 4% of revenue.
Assume the following two changes for the special order: 1) variable cost of goods sold will increase by $0.88 per unit, and 2) there will be no selling commissions. What will be the effect of these two changes on the special order profit? (13801.4 IS NOT THE CORRECT ANSWER)
Per-Unit Total Cost of goods sold $8.36 $560,956 Period costs 2.60 174,460 Total $10.96 $735,416Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Statementshowing Computations Paticulars 1) Sales = 4570*11 50,270.00 Less Variable Expenses Cost of goods sold = (560956-122122)/67100 * 4570 + 4570*.88 33,909.40 period cost = (174460 - 91256)/67100*4570 5,666.80 Total variable cost 39,576.20 Contribution Margin 10,693.80 Fixed cost : Cost of goods sold - period cost - Total fixed cost - Net operating income 10,693.80 Paticulars 2) Sales = 4570*11 50,270.00 Less Variable Expenses Cost of goods sold = (560956-122122)/67100 * 4570 -50270*4% 27,877.00 period cost = (174460 - 91256)/67100*4570 5,666.80 Total variable cost 33,543.80 Contribution Margin 16,726.20 Fixed cost : Cost of goods sold - period cost - Total fixed cost - Net operating income 16,726.20
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