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How do find what effect on profit of accepting the order

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Reference no: EM132746502

Accustart produces a hard disk drive that sells for $176 per unit. The cost of producing 25,000 drives in the prior year was:

Direct material $725,000
Direct labor 450,000
Variable overhead 225,000
Fixed overhead 1,500,000
Total cost $2,900,000

  • At the start of the current year, the company received an order for 3,080 drives from a computer company in China. Management of Accustart 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 $114 per unit.

Problem 1: What will be the effect on profit of accepting the order? (Enter decrease in profit using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Problem 2: Will Profit Increase or decrease? and by how much______________ (enter a dollar amount)?

Reference no: EM132746502

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