Lattimer Company had the following results of operations for the past year: Contribution margin income statement Per
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Question:
Lattimer Company had the following results of operations for the past year:
Contribution margin income statement | Per Unit | Annual Total |
---|---|---|
Sales (21,000 units) | $ 12.00 | $ 252,000 |
Variable costs | ||
Direct materials | 1.50 | 31,500 |
Direct labor | 4.00 | 84,000 |
Overhead | 1.00 | 21,000 |
Contribution margin | 5.50 | 115,500 |
Fixed costs | ||
Fixed overhead | 1.00 | 21,000 |
Fixed selling and administrative expenses | 1.40 | 29,400 |
Income | $ 3.10 | $ 65,100 |
A foreign company offers to buy 7,000 units at $7.50 per unit. In addition to variable costs, selling these units would add a $0.25 selling expense for export fees. Lattimer’s annual production capacity is 31,000 units. If Lattimer accepts this additional business, how much the special order will yield?
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