At the end of the year, a company offered to buy 4,890 units of a product from X
ID: 2463486 • Letter: A
Question
At the end of the year, a company offered to buy 4,890 units of a product from X Company for $12.00 each instead of the company's regular price of $18.00 each. The following functional income statement is for the 66,500 units of the product that X Company has already made and sold to its regular customers:
Fixed cost of goods sold for the year was $130,340, and fixed selling and administrative costs were $97,090. The special order product has some unique features that will require additional material costs of $0.71 per unit and the rental of special equipment for $4,500.
1. Profit on the special order would be what? (35109 is not the answer. Thats the only one I can get)
2. Assume the following fact: regular variable selling and administrative costs include sales commissions equal to 2% of sales, but there will be no sales commissions on the special order. This will cause the special order profit to increase by what?
Sales $1,197,000 Cost of goods sold 569,240 Gross margin $627,760 Selling and administrative costs 195,510 Profit $432,250Explanation / Answer
Given Sales 1197000 Cost of goods sold 569240 Gross margin 627760 Selling and administrative costs 195510 Profit 432250 1 Particulars Working Amount Sales =12*4890 58680 Variable Cost of goods sold= Relavant Cost =(569240-130340)/66500*4890 32274 Additional Material cost =0.71*4890 3471.9 Gross margin 22934.1 Selling and administrative costs =(195510-97090)/66500*4890 7237.2 Rental Space 4500 Profit 11196.9 2 Particulars Working Amount Sales =12*4890 58680 Variable Cost of goods sold= Relavant Cost =(569240-130340)/66500*4890 32274 Additional Material cost =0.71*4890 3471.9 Gross margin 22934.1 Selling and administrative costs =(195510-97090)/66500*4890 7237.2 Rental Space 4500 Add: Sales commision =58680*2% 1173.6 Profit 12370.5
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