At the end of the year, a company offered to buy 4,030 units of a product from X

Question

At the end of the year, a company offered to buy 4,030 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 64,900 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 $142,131, and fixed period costs were $79,178. Variable period costs include selling commissions equal to 4% of revenue.

5. Profit on the special order is ____________

6. Assume the following two changes for the special order: 1) variable cost of goods sold will decrease by $0.70 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

Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Q5 Sales = 4030*11             44,330.00 Less Variable Expenses Cost of goods sold = (559438-142131)/64900 * 4030             25,912.90 period cost = (167442 - 79178)/64900*4030               5,480.80 Total variable cost             31,393.70 Contribution Margin             12,936.30 Fixed cost :   Cost of goods sold                            -   period cost                            -   Total fixed cost                            -   Profit from special order             12,936.30 Paticulars Q6a Sales = 4030*11             44,330.00 Less Variable Expenses Cost of goods sold = (559438-142131)/64900 * 4030 - 4030*.70             23,091.90 period cost = (167442 - 79178)/64900*4030               5,480.80 Total variable cost             28,572.70 Contribution Margin             15,757.30 Fixed cost :   Cost of goods sold                            -   period cost                            -   Total fixed cost                            -   Profit from special order             15,757.30 Paticulars Q6b Sales = 4030*11             44,330.00 Less Variable Expenses Cost of goods sold = (559438-142131)/64900 * 4030 - 4030*11*4%             24,139.70 period cost = (167442 - 79178)/64900*4030               5,480.80 Total variable cost             29,620.50 Contribution Margin             14,709.50 Fixed cost :   Cost of goods sold                            -   period cost                            -   Total fixed cost                            -   Profit from special order             14,709.50

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