At the end of the year, a company o instead of the r has already made and sold t
ID: 2509750 • Letter: A
Question
At the end of the year, a company o instead of the r has already made and sold to its regular customers: ffered to buy 4,350 units of a product from X Company for a special price of $12.00 each e company's regular price. The following information relates to the 60,300 units of the product that X Company Total Per-Unit Revenue Cost of Goods Sold $1,025,100 $17.00 Variable Fixed 314,163 135,675 5.21 2.25 Selling and Administrative Costs 1.16 Variable Fixed 69,948 62,712 $442,602 1.04 $7.34 Profit The special order product has some unique features that will require additional material costs of $0.78 per unit and the rental of special equipment for $3,000. 8 pt 5. Profit on the special order would be 5. AO 818,098 BO $22,622 CO $28,277 DO $35,347 EO $44,183 FO 855,229 8 pt s. The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with mand falling by 550 units. This loss in sales will cause firm profits to fall by 6. A° S3,742 BO $4,677 ??$5,846 DO 87,308 EO s9,135 FO s11419Explanation / Answer
Question - 5
Offer selling price = 12
Variable cost relevant to offer = Variable manufacuturing 5.21 + special material 0.78 + Selling admin variable cost 1.16 = 7.15
Contribution margin per Unit = 12 - 7.15 = 4.85
Profit = Units * contribution margin per unit - Additional fixed cost
= 4350 Units * 4.85 - 3000 = 18098 ................. Option - A
Question - 6
Contribution from regular sale = 17 - ( 5.21 + 1.16) = 10.63
If 550 units could not be sold, then loss due to fall in demand = 550 * 10.63 = 5846 .......... Option - C
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