At the end of the year, a company offered to buy 4,090 units of a product from X
ID: 2575304 • Letter: A
Question
At the end of the year, a company offered to buy 4,090 units of a product from X Company for a special price of $12.00 each instead of the company's regular price of $19.00 each. The following information relates to the 62,300 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 $138,929, and fixed period costs were $84,105. Variable period costs include selling commissions equal to 2% of revenue.
Assume the following two changes for the special order: 1) variable cost of goods sold will increase by $0.86 per unit, and 2) there will be no selling commissions. What will be the effect of these two changes on the special order profit?
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Statementshowing Computations Paticulars Q5 Sales = 4090*12 49,080.00 Less Variable Expenses Cost of goods sold = (583751 - 138929)/62300 * 4090 29,202.60 period cost = (159488 - 84105)/62300*4090 4,948.90 Total variable cost 34,151.50 Contribution Margin 14,928.50 Fixed cost : Cost of goods sold - period cost - Total fixed cost - Profit from special order 14,928.50 Paticulars Q6a Sales = 4090*12 49,080.00 Less Variable Expenses Cost of goods sold = (583751 - 138929)/62300 * 4090 + 4090*.86 - 4090*12*.02 31,738.40 period cost = (159488 - 84105)/62300*4090 4,948.90 Total variable cost 36,687.30 Contribution Margin 12,392.70 Fixed cost : Cost of goods sold - period cost - Total fixed cost - Profit from special order 12,392.70 Special order profit would decrease by 2,535.80
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