Differential Anslysis Per Unit Total Differential revenue s 43,200 Differential
ID: 2532167 • Letter: D
Question
Differential Anslysis Per Unit Total Differential revenue s 43,200 Differential coss Direct material 11.1 Direct labor 9.36 Variable manufacturing overhead 7.02 Selling 1.44 Shipping(FO factory terms) Total vanati, cost 28.92 34 704 Conenibucion margin from special order Fixed cost increment xtra cout 5,400 Profit on special order 51.096 b. What is the lowest price Glendale could recelve and still make a profit of $3,600 before income taxes on the special order? Round answer to two decimal places if applicable ?- 96Explanation / Answer
Calculation of Lowest price on which Glendale can received profit $3600 before income tax
Total Incremental Variable cost @28.92 per unit 1200 unit ($34704/$28.92) $34704
Incremental extra cost $ 5400
Total Cost $40104
Profit required on special order $3600
Total sale value $43704
Hence minimum selling price for making minimum $3600 profit on sale
= Total Required Sale Value /No. of selling unit
=$43704/1200=$36.42 per unit
Or
No. of unit = $34704/$28.92= 1200 unit
Variable cost per unit $28.92
Additional FC per unit = $5400/1200 $4.5
Profit required P.U $3600/1200 $3
Sale price per unit $36.42
Note:
It’s assume that Additional Fixed Cost incurred ue to special contract so relevant for decision making and the Unit for Special contract is fixed.
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