Assume that if x company accepts the special order it will

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Reference no: EM13579310

X Company produces and sells 60,500 units of its regular product each year for $13.00 each. The following cost information relates to this production:

	Total	Per-Unit
Direct materials	$115,555	$1.91
Direct labor [all variable]	88,935	1.47
Variable overhead	165,165	2.73
Fixed overhead	121,000	2.00
Variable selling	78,045	1.29
Fixed selling	78,650	1.30

A company has offered to buy 4,650 units for $11.85 each. Because the special order product is slightly different than the regular product, X Company will have to rent some equipment at a cost of $16,000.
Profit on the special order is ?

Assume that if X Company accepts the special order, it will have to lower the selling price on each of its regular units to $12.51. Independent of #1, the effect of lowering the selling price will be to decrease company profits by?

Reference no: EM13579310

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