Special Order Northern Company regularly sells its only product for $38 per unit

Question

Special Order
Northern Company regularly sells its only product for $38 per unit and has a 25% profit on each sale. The company has accepted a special order for a number of units, the production of which would use part of its unused capacity. The special order sales price is 50% of the normal price, and the profit margin is only 60% of the regular dollar profit. What, apparently, is

Round answers to two decimal places, when applicable.

a. Northern's profit per unit on the special order?

$Answer

b. Northern's variable cost per unit?

$Answer

c. Northern's average fixed cost per unit on regular sales?

$Answer

CLICK HERE TO REVIEW LEARNING OBJECTIVES QUESTION 2 Not complete Points out of 2.00P Flag question Special Order Northern Company regularly sells its only product for $38 per unit and has a 25% profit on each sale. The company has accepted a special order for a number of units, the production of which would use part of its unused capacity. The special order sales price is 50% of the normal price, and the profit margin is only 60% of the regular dollar profit. What, apparently, is Round answers to two decimal places, when applicable. a. Northern's profit per unit on the special order? b. Northern's variable cost per unit? c. Northern's average fixed cost per unit on regular sales? Check

Explanation / Answer

a.profit per unit on special order:

first let us know the profit per unit on regular order =>$38*25% =>$9.50.

now,

special order profit is only 60% of regular profit

=> $9.50 * 60% =>$5.70 per unit of special order.

b.Northern's variable cost per unit

Special order price = normal price *50% =>$38*50% =>$19.

special order variable cost = price - profit per unit of special order

=>$19 - $5.70 =>$13.30.

This is the variable cost per unit for Northern company =$13.30.

(since variable cost per unit will remain the same for normal production and special order).

c.fixed cost per unit on regular sales.

=> price on regular sale - profit on regular sale - variable cost

=>$38 - $9.5 - $13.30

=>$15.20.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.