Questions 5 and G refer to the following informations , the end of the year, a c
ID: 2509821 • Letter: Q
Question
Questions 5 and G refer to the following informations , the end of the year, a company offered to buy 4,820 units of a product from X Company for a special price of $12.00 each At instead of the company's regular price. The following information relates to the 63,400 units of the product that X Compeny has already made and sold to its regular custoners: Total Per-Unit $17.00 Revenue Cost of Goods Sold $1,077,800 Variable Fixed 401,956 143,918 6.34 2.27 Selling and Administrative Costs Variable Fixed 73,544 83,054 $375,328 1.16 1.31 85.92 Profit 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 $4,000. 8pts. Profit on the special order would be 5. Ad $8,069 BO$10,836 CO s13,545 DO s16,931 EOs21,164 FOs26,455 8 pt 6. The marketing manager thinks that if X Company accepts the special order, regular customers will be lost, with emand fallin 6. A?$4,624 B?$5,225 CO $5,904 DO s6,672 EO $7,539 FOs8,519Explanation / Answer
5.
Relavent costs = Variable Cost of goods sold + Variable Selling and Administrative costs + Material costs + Rental of special equipment
= (6.34*4,820) + (1.16*4,820) + (0.86*4,820) + 4,000
= 30,558.8 + 5,591.2 + 4,145.2 + 4,000
= 44,295.2
Revenues = 4,820 units * 12 per unit
= 57,840
Profit on special order = Revenues - Relavent costs
= 57,840 - 44,295.2
= 13,545
6.
Sales = 63,400 - 550 = 62,850
Profit = Revenues - Variable costs - Fixed costs
= (62,850*17) - [(6.34+1.16)*62,850] - (143,918+83,054)
= 1,068,450 - 471,375 - 226,972
= 370,103
Decrease in profits = 375,328 - 370,103 = 5,225
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