Brike Company, which manufactures one product - robes, has enough idle capacity available to accept a...

 

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Brike Company, which manufactures one product - robes, has enough idle capacity available to accept a special order of 10,000 robes at $9 a robe. A predicted income statement for the year, without this special order is as follows: Sales revenue $12.50 $1,250,000 Manufacturing costs: Variable 6.25 625,000 Fixed 1.75 175,000 8.00 800,000 Gross profit 4.50 450,000 Marketing costs: Variable 1.80 180,000 Fixed 1.45 145,000 3.25 325,000 Operating profit $ 1.25 $ 125,000 If the order is accepted, variable marketing costs on the special order would be reduced 25 percent because all of the robes would be packed and shipped in one lot. However, if the offer is accepted, management estimates that it will lose the sale of 2,000 robes at regular prices. What is the net gain or loss from the special order? Brike Company, which manufactures one product - robes, has enough idle capacity available to accept a special order of 10,000 robes at $9 a robe. A predicted income statement for the year, without this special order is as follows: Sales revenue $12.50 $1,250,000 Manufacturing costs: Variable 6.25 625,000 Fixed 1.75 175,000 8.00 800,000 Gross profit 4.50 450,000 Marketing costs: Variable 1.80 180,000 Fixed 1.45 145,000 3.25 325,000 Operating profit $ 1.25 $ 125,000 If the order is accepted, variable marketing costs on the special order would be reduced 25 percent because all of the robes would be packed and shipped in one lot. However, if the offer is accepted, management estimates that it will lose the sale of 2,000 robes at regular prices. What is the net gain or loss from the special order?

Answer rating: 100% (QA)

Unit variable marketing cost 18075 135 If special order is accep... View the full answer