nd L TUlur to the following problem: X Company prodiu lates to this es and sells

Question

nd L TUlur to the following problem: X Company prodiu lates to this es and sells 61,500 units of its regular product each year for $14.00 each. The following cost information Per-Unit Direct materials Direct labor fall variable] Variable overhead Fixed overhead Variable selling Fixed selling Total $106,395 83,025 160,515 116,235 86,100 84,255 1.35 2.61 1.89 1.40 1.37 A company has offered to buy 4,530 units for $11.85 each. Because the special order product is slightly different than the regular product, direct material costs will increase by $0.15 per unit, and some special equipment will have to be rented for a total of $18,000 8 pt1. Proft on the special order is 1. A? $1,782 BO $826 CO $1,086 DO $1,406 EO $2.264 FO $2,883 8pt Assume that if X Company accepts the special order, regular sales will fall by 1,200 units. Independent of #1, the effect of the fall in regular sales will be to decrease company proft by $5,307 BO S6,634 CO $8,292 DO S10,365 EO $12,956 FO $16,195

Explanation / Answer

Sales revenue 11.85 53681 Expense Direct material 1.88 8516 Direct labor 1.35 6116 Variable overheads 2.61 11823 Variable selling 1.4 6342 Rent of equipment 18000 Total expense 50797 Profit on special order 2883 Sales revenue 14 Expense Direct material 1.73 Direct labor 1.35 Variable overheads 2.61 Variable selling 1.4 Total expense 7.09 Profit 6.91 Units 1200 Decrease in profit 8292

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