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What will be the net change to profits

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Question - Beazer Company manufactures a product with the following full unit costs at a volume of 2,000 units:

Direct materials $375

Direct labor 195

Manufacturing overhead (25% variable) 400

Selling expenses (40% variable) 240

Administrative expenses (20% variable) 200

Total per unit $1,410

A company recently approached Beazer's management with an offer to purchase 350 units for $975 each. Beazer currently sells the product to dealers for $1,850 each. Beazer's capacity is sufficient to produce the extra 350 units. No selling expenses would be incurred on the special order. Should Beazer's management accept the offer? What will be the net change to profits?

Reference no: EM131806558

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