Oezto.mheducation.com/hm.tpx Gwinnett Barbecue Sauce Corporation manufactures a

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Oezto.mheducation.com/hm.tpx Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 10,500 cases of sauce each year but is currently only manufacturing and selling 9,450. The following costs relate to annual operations at 9,450 cases: Total Cost Variable manufacturing cost Fixed manufacturing cost Variable selling and administrative cost Fixed selling and administrative cost $75,600 $46,000 $28,350 Gwinnett normally sells its sauce for $20 per case. A local school district is interested in purchasing Gwinnett's excess capacity of 1.050 cases of sauce but only if they can get the sauce for $10 per case. This special order would not affect regular sales or total fixed costs or variable costs per unit If this special order is accepted, Gwinnett's profits for the year will 0 Increase by $105 O decrease by $1,050 O decrease by $9,450 O decrease by $6,300 References Multiple Choice

Explanation / Answer

Calculate profit on special order :

so answer is b) decrease by 1050

Sales (1050*10) 10500 Less: Variable manufacturing cost (1050*8) (8400) Less: variable selling and administrative exp (1050*3) (3150) Net loss (1050)

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