Company D produces product ZZZ that sells for $200 per unit. C Company S has offered...

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Company D produces product ZZZ that sells for $200 per unit. C Company S has offered to purchase 300 units at a special one-time price of $150 per unit. Use the following information to answer A through D. Product ZZZ Material cost per unit Allocated corporate-level CEO salary Step costs (batch) paid for setup of every 200 units (must be paid in 200 unit increments) Labor cost per unit Sales commission per unit (to sell to public) Allocated factory-level depreciation Other variable costs per unit $80 $40,000 $1,800 $40 $2 $15,000 $20 A. What is the contribution margin per unit of this special order? B. What is the overall profit or loss Company D would earn from this special order? C. Should Company D accept this special order? Why? D. If Company S offers to purchase 600 units instead of 300 units, should Company D accept this special order? Why? Company D produces product ZZZ that sells for $200 per unit. C Company S has offered to purchase 300 units at a special one-time price of $150 per unit. Use the following information to answer A through D. Product ZZZ Material cost per unit Allocated corporate-level CEO salary Step costs (batch) paid for setup of every 200 units (must be paid in 200 unit increments) Labor cost per unit Sales commission per unit (to sell to public) Allocated factory-level depreciation Other variable costs per unit $80 $40,000 $1,800 $40 $2 $15,000 $20 A. What is the contribution margin per unit of this special order? B. What is the overall profit or loss Company D would earn from this special order? C. Should Company D accept this special order? Why? D. If Company S offers to purchase 600 units instead of 300 units, should Company D accept this special order? Why?

Answer rating: 100% (QA)

To calculate the contribution margin per unit and determine the overall profit or loss from the special order we need to consider the relevant costs a... View the full answer