Questions 5 and 6 refer to the following information At the end of the year, a c

Question

Questions 5 and 6 refer to the following information At the end of the year, a company offered to buy 4,600 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 61,900 units of the product that X Company made and sold to its regular customers during the year: Cost of goods sold Period costs Total Per-Unit $8.56 2.56 $11.12 Total $529,864 158,464 $688,328 Fixed cost of goods sold for the year were $137,418, and fixed period costs were $70,566. Variable period costs include selling commissions equal to 4% of revenue. 5. Profit on the special order is $14,904 You are correct. Your receipt no. is 152-1056 e Previous Tries 6. Assume the following two changes for the special order: 1) variable cost of goods sold will decrease 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? -2024 Submit Answer Incorrect. Tries 3/5 Previous Tries A Communication Blocked Send Feedback

Explanation / Answer

Variable unit cost for cost of goods sold = (529864-137418)/61900=6.34 Variable unit cost for period costs = (158464-70566)/61900=1.42 Sales commissions =18*4% = 0.72 6 Incremental revenue 50600 =4600*11 Variable costs 28336 =4600*(6.34-0.88+1.42-0.72) Profit on sepcial order 22264 Profit on special order will increase by $6680 or $7360(22264-14904)

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