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ABC Company has a current production level of 20,000 units per month. Unit costs at this level are:
Direct materials $0.25;
Direct labor $0.40;
Variable overhead $0.15;
Fixed overhead $0.20;
Marketing-Fixed $0.20;
Marketing/distribution-Variable $0.40.
Problem 1: Current monthly sales are 18,000 units. Based Company has contacted ABC Company about purchasing 1,500 units at $2 each. Current sales would not be affected by this special order, and variable marketing/distribution costs would not be incurred on the special order. What is ABC Company's change in profits using the contribution margin format if the order is accepted
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