Calculate the increase in company profits

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Reference no: EM131224108

ABC Company. has the capacity to produce 15,000 lamps each month. Current regular production and sales are 10,000 lamps at a selling price of $15 each. The costs of producing each lamp is:

direct materials $5.00

direct labor 3.00

variable overhead 0.75

fixed overhead 1.50

variable selling costs 0.25

fixed selling costs 1.00

ABC Company has received a special order who wants to purchase 6,000 lamps at a reduced price of $10 per lamp. ABC Company has determined that there would be no selling expenses in connection with this special order.

Calculate the increase in company profits if ABC Company accepts the special order.

Reference no: EM131224108

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