Power Drive, INC produces a hard disk drive that sells for $140 per unit. The cost of producing 20,000 drives in the prior year was:

At the start of the current year, the company received an order for 2,000 drives from a computer company in China. Management of Power Drive has mixed feeling about the order. On the one hand they welcome the order because they currently have access capacity. Also, this is the company's first international order. On the other hand, the company is China is only willing to pay $100 per unit.

Required
What will be the effect on profit of accepting the order?

Transcribed Image Text:

Per unit 25 15 Direct material Direct labor Variable overhead Fixed overhead Total cost S500,000 300,000 100,000 1.200,000 S2,100.000