Solution-Find and determine what effect on profit of

Find and determine what effect on profit of accepting order

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Reference no: EM132740465

Macaron produces a hard disk drive that sells for $172 per unit. The cost of producing 25,000 drives in the prior year was:

Direct material $725,000
Direct labor 450,000
Variable overhead 200,000
Fixed overhead 1,450,000
Total cost $2,825,000

At the start of the current year, the company received an order for 2,780 drives from a computer company in China. Management of Macaron has mixed feelings about the order. On one hand, they welcome the order because they currently have excess capacity. Also, this is the company's first international order. On the other hand, the company in China is willing to pay only $137 per unit.

Problem 1: What will be the effect on profit of accepting the order?

Reference no: EM132740465

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Find and determine what effect on profit of accepting order

Reference no: EM132740465

Reference no: EM132740465

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