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Calculate the contribution from contribution lost

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Reference no: EM133006504

Monk Builders has just signed a contract with the state government to replace the windows in low-income housing units throughout the state. Monk needs 80,000 windows to complete the job and has offered to buy them from Wilson at a price of $120.00 per window. Monk will pick up the windows at Wilson's plant, so Wilson will not incur the $2 per window shipping charge. In addition, Wilson will not need to pay a distributor's commission, since the windows will not be sold through a distributor.

Wilson Sandhill is a leading producer of vinyl replacement windows. The company's growth strategy focuses on developing domestic markets in large metropolitan areas. The company operates a single manufacturing plant in Kansas City with an annual capacity of 500,000 windows. Current production is budgeted at 450,000 windows per year, a quantity that has been constant over the past three years.

Based on the budget, the accounting department has calculated the following unit costs for the windows:

Direct materials $60.00
Direct labor 17.00
Manufacturing overhead 19.00
Selling and administrative 14.00
Total unit cost $110.00

Problem 1: Calculate the contribution from special order, contribution lost from regular sales and the net contribution from special order.

Reference no: EM133006504

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