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Question - The following cost functions apply to X Company's regular production and sales during the year:
Cost of goods sold: $6.76 (X) + $119,226
Selling and administrative expenses: $1.39 (X) + $78,843
where X is the number of units produced and sold. During the year, X Company sold 64,100 units for $17.00 each. At the end of the year, a company offered to buy 4,190 units but was only willing to pay $11.00 each. X Company had the capacity to produce the additional 4,190 units.
Consider the following three changes. Direct material costs on the special order would have increased by $0.75 per unit, direct labor costs on the special order would have decreased by $0.41 per unit, and X Company would have had to rent special equipment for $1,000. The effect of these changes would have been to reduce profit on the special order by?
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