Questions 5 and 6 refer to the following problem: At the end of the year, a comp
ID: 2463606 • Letter: Q
Question
Questions 5 and 6 refer to the following problem:
At the end of the year, a company offered to buy 4,800 units of a product from X Company for $12.00 each instead of the company's regular price of $19.00 each. The following functional income statement is for the 61,400 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 $131,396, and fixed selling and administrative costs were $62,014. The special order product has some unique features that will require additional material costs of $0.86 per unit and the rental of special equipment for $3,500.
5. Profit on the special order would be $15,172
6. Assume the following fact: regular variable selling and administrative costs include sales commissions equal to 3% of sales, but there will be no sales commissions on the special order. This will cause the special order profit to increase by ______
Sales $1,166,600 Cost of goods sold 493,656 Gross margin $672,944 Selling and administrative costs 144,904 Profit $528,040Explanation / Answer
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