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Question - The following cost per unit relate to the lawn mower division of a mowing company and was based upon production of 1,000 units with capacity is 1,200 units:
Variable Product Costs
Direct material s $100
Direct labor $90
Variable factory overhead $50
Fixed Factory Overhead
Depreciation $25
Property Taxes $8
Factory Guards $15
General and Administrative Expenses
Variable selling expense $80
Fixed Administrative Expense $22
Total Cost $390
A lawn mower sells for $500. A salesperson has bought in a special order for 300 mowers at $400 each.
How much will profits increase if the special order is accepted and the company cannot exceed capacity?
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