Last year, X Company sold 65,400 units of its only product for $19.00 each. Total costs were
Question:
Last year, X Company sold 65,400 units of its only product for $19.00 each. Total costs were as follows:
| Cost of goods sold | |
| Variable | $375,396 |
| Fixed | 136,032 |
| Selling and administrative | |
| Variable | $71,940 |
| Fixed | 94,830 |
At the end of the year, a company offered to buy 4,200 units of the product for $11.00 each instead of $19.00. X Company's production manager thought that the special order units would probably require additional variable costs per unit of $1.06 and the rental of special equipment for $1,000. X Company had the capacity to produce the additional units, and there would have been no selling and administrative costs for the special order. But X Company still rejected the order.
4. If X Company had accepted the special order, firm profits would have increased by … ?
5. There was concern that regular customers would have found out about the special order, and X Company's regular sales this year would have fallen by 800 units. The result of these lost sales would have been to reduce X Company's profits this year by … ?
Expert Answer:
Answer 4 Computation of Regular Contribution margin per unit Total Per unit Sales 1242600 1900 Var... View the full answer
