At the end of the year, a company offered to buy 4,970 units of a product from X
ID: 2574930 • Letter: A
Question
At the end of the year, a company offered to buy 4,970 units of a product from X Company for a special price of $12.00 each instead of the company's regular price of $17.00 each. The following information relates to the 64,800 units of the product that X Company made and sold to its regular customers during the ewar Cost of goods sold Period costs Total Per-Unit $8.96 2.60 Total $580,608 168,480 $11.56 $749,088 Fixed cost of goods sold for the year were $134,784, and fixed period costs were $78,408. Variable period costs include selling commissions equal to 4% of revenue. 5. Profit on the special order is 18864.6 Submit Answer Incorrect. Tries 3/5 Previous Tries 6. Assume the following two changes for the special order: 1) variable cost of goods sold will decrease by $o.70 per unit, and 2) there will be no selling commissions. What will be the effect of these two changes on the special order profit? 23099 Submit Answer Incorrect. Tries 2/5 Previous TriesExplanation / Answer
Cost of goods sold ( variable ) = 580608 - 134784 = 445824
Variable cost of goods sold per unit = 445824 / 64800 = 6.88
Variable period cost = 168480 - 78408 = 90072
Variable period cost per unit = 90072 / 64800 = 1.39
Total variable cost = 6.88 + 1.39 = 8.27
QUESTION - 5
Profit on special order = 4970 Units * ( 12 - 8.27 ) + 4% ( 17 - 12) * 4970 = 19532.1...............final answer
When sales commision is on the basis of sales revenue, there should be decrease in such expenses, becuase selling price decreased from 17 to 12. So saving in such expenses is added to profit.
QUESTON - 6
Profit as above + saving in variable cost + saving in sales commision.
19532.1 + 4970 * 0.70 + 4% * 12 * 4970 = 23011.1 + 2385.6 = 25396.7..................final answer
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