Question: Please show answers and work. Please help. Capitol has received a special order for 2,000 units of its product at a special price of $200.

Please show answers and work. Please help.

Capitol has received a special order for 2,000 units of its product at a special price of $200. The product normally sells for $260 and has the following manufacturing costs: Per unit Direct materials.......................................$78 Direct labor................................................. 52 Variable manufacturing overhead... 39 Fixed manufacturing overhead......... 65 Unit costs................................................... 234

Assume that Capitol has sufficient capacity to fill the order without harming normal production and sales and all fixed overhead is unavoidable.

1. If Capital accepts the order, what effect will the order have on the company's short-term profit? 2. What minimum price should Capital charge to achieve a $65,000 incremental profit? 3. Now assume Capital is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Capitol accepts the order, what effect will the order have on the company's short-term profit?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!