At the end of the year, a company offered to buy 4,360 units of a product from X
ID: 2574883 • Letter: A
Question
At the end of the year, a company offered to buy 4,360 units of a product from X Company for a special price of $12.00 each instead of the company's regular price of $19.00 each. The following information relates to the 61,700 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 $131,421, and fixed period costs were $80,210. 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 increase by $0.76 per unit, and 2) there will be no selling commissions. What will be the effect of these two changes on the special order profit?
Per-Unit Total Cost of goods sold $8.49 $523,833 Period costs 2.36 145,612 Total $10.85 $669,445Explanation / Answer
variable cost of goods sold per unit =(523833-131421)/61700= 6.36 Variable Period costs =(145612-80210)/61700= 1.06 Variable commissions = 19*4%= 0.76 5 Incremental revenue 52320 =4360*12 Less:Variable costs 32351 =4360*(6.36+1.06) Profit on the special order 19969 6 Incremental revenue 52320 =4360*12 Less:Variable costs 32351 =4360*(6.36+0.76+1.06-0.76) Profit on the special order 19969 Effect of these two changes on the special order profit will be $0
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.