Markson Company had the following results of operations for the past year: Contribution margin income statement Per
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Question:
Markson Company had the following results of operations for the past year:
| Contribution margin income statement | Per Unit | Annual Total |
|---|---|---|
| Sales (11,200 units) | $ 20.00 | $ 224,000 |
| Variable costs | ||
| Direct materials | 4.25 | 47,600 |
| Direct labor | 6.00 | 67,200 |
| Overhead | 2.00 | 22,400 |
| Contribution margin | 7.75 | 86,800 |
| Fixed costs | ||
| Fixed overhead | 4.25 | 47,600 |
| Income | $ 3.50 | $ 39,200 |
A foreign company offers to buy 3,600 units at $14 per unit. In addition to variable manufacturing and administrative costs, selling these units would increase fixed overhead by $2,880 for the purchase of special tools. Markson’s annual productive capacity is 16,800 units. If Markson accepts this additional business, its profits will be ?
Expert Answer:
Given Product Capacity 16800 units Current Sale 11200 units Special Order From Foreign Company 3600 ... View the full answer
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