Cuddly Toys makes a large teddy bear that currently sells for $62 per bear. At a...

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Cuddly Toys makes a large teddy bear that currently sells for $62 per bear. At a production level of 20,000 bears per year. the bears have a total unit cost of $50 per bear. The total unit cost is comprised of variable costs of $45 per bear and fixed costs of $5 per bear (or total fixed costs of $100,000 - 20,000 bears). Cuddly Toys has excess capacity to manufacture 15,000 more bears. The company has been approached by a new customer, who wants to buy 5,000 large bears for $47 aplece. What is the effect on operating profit if the special order is accepted? Cuddly Toys makes a large teddy bear that currently sells for $62 per bear. At a production level of 20,000 bears per year. the bears have a total unit cost of $50 per bear. The total unit cost is comprised of variable costs of $45 per bear and fixed costs of $5 per bear (or total fixed costs of $100,000 - 20,000 bears). Cuddly Toys has excess capacity to manufacture 15,000 more bears. The company has been approached by a new customer, who wants to buy 5,000 large bears for $47 aplece. What is the effect on operating profit if the special order is accepted?

Answer rating: 100% (QA)

To determine the effect on operating profit if the special order is accepted follow these steps 1 Ca... View the full answer