At the end of the year, a company offered to buy 4,230 units of a product from X
ID: 2574233 • Letter: A
Question
At the end of the year, a company offered to buy 4,230 units of a product from X Company for a special price of $11.00 each instead of the company's regular price of $18.00 each. The following information relates to the 65,200 units of the product that X Company made and sold to its regular customers during the year:
Fixed cost of goods sold for the year were $132,356, and fixed period costs were $81,500. Variable period costs include selling commissions equal to 3% of revenue.
5. Profit on the special order is ___?
6. Assume the following two changes for the special order: 1) variable cost of goods sold will increase by $0.88 per unit, and 2) there will be no selling commissions. What will be the effect of these two changes on the special order profit?
Per-Unit Total Cost of goods sold $8.18 $533,336 Period costs 2.32 151,264 Total $10.50 $684,600Explanation / Answer
Variable cost = $8.18
Additional VC = $0.88
TOTAL VC= 9.06
SELLING PRICE = $11
CONTRIBUTION= $1.94 X 4230 UNITS= $8206.20
This is the profit on special order
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