1. At the end of the year, a company offered to buy 4,920 units of a product from X Company for a special price of $12.00 each instead of the company's regular price of $19.00 each. The following information relates to the 61,200 units of the product that X Company made and sold to its regular customers during the year:

_______________________Per-Unit                      Total

Cost of goods sold...............$7.61..............$465,732

Period costs...........................2.30.................140,760

Total......................................$9.91..............$606,492

Fixed cost of goods sold for the year were $113,832, and fixed period costs were $70,380. Variable period costs include selling commissions equal to 2% of revenue.

a. Profit on the special order is ______.

b. Assume the following two changes for the special order: 1) variable cost of goods sold will decrease by $0.80 per unit, and 2) there will be no selling commissions. What will be the effect of these two changes on the special order profit? ______

2. The following information is for X Company's two products, A and B, last year:

___________________Product A _______Product B

Sales..........................$92,940..................$94,280

Total variable costs.....51,117....................56,568

Total fixed costs.........52,100....................30,530

Profit.......................$-10,277....................$7,182

Because of the reported loss for Product A, X Company is considering dropping it. Further analysis reveals that $25,130 of Product A's fixed costs and $7,510 of Product B's fixed costs are common costs that the company allocates to the two products.

a. If X Company drops Product A, company profits will change by $-14,853 (This is correct)

b. Assume that sales of Product B can be increased by $17,510 if Product A is dropped. What will be the effect of this increase on company profits _______.