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Compute what firm profits would have increased by

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Reference no: EM132768434

During the year, X Company sold 60,800 units of one of its products for $17.00 each. The following cost functions are for these regular production and sales levels:

  • Cost of goods sold: $7.47X + $128,896
  • Selling and administrative expenses: $2.71X + $64,448Variable selling and administrative expenses include sales commissions equal to 2% of sales. At the end of the year, a company offered to buy 4,470 units but was only willing to pay $12.00 each. X Company had the capacity to produce the 4,470 units.

Problem 1: If X Company had accepted the special order, firm profits would have increased by

Problem 2: Now assume that there would not have been sales commissions for the special order. If X Company had accepted the special order, firm profits would have increased by

Reference no: EM132768434

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