Reference no: EM133006503

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

The company's budget includes $5,400,000 in fixed overhead and $3,150,000 in fixed selling and administrative expenses. The windows sell for $150.00 each. A 2% distributor's commission is included in the selling and administrative expenses.

Problem 1: Calculate variable overhead per unit and variable selling and administrative costs per unit.

Problem 2:  Indigo, Finland's second largest homebuilder, has approached Wilson with an offer to buy 75,000 windows during the coming year. Given the size of the order, Indigo has requested a 35% volume discount on Wilson's normal selling price. Calculate the contribution from special order.