Question: Variable costs and fixed costs for the current activity level of a manufacturer is as follows: Production costs Variable costs Manufacturing: Direct labour $375 000
Variable costs and fixed costs for the current activity level of a manufacturer is as follows: Production costs Variable costs Manufacturing: Direct labour $375 000 Direct material $262 500 Marketing $187 500 Total variable costs $825 000 Fixed costs Manufacturing $275 000 Marketing $175 000 Total fixed costs $450 000 Total costs $1 275 000 Variable cost per unit $110 Fixed cost per unit $60 Average unit cost $170 Current monthly production is 7,500 units. The firm has just received a special one-time order for 2,525 products at $102 per unit. For this particular offer, no variable marketing costs will be incurred. What is the contribution to profit from accepting the special order?
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