Question

At the end of the year, a company offered to buy 4,840 units of a product from X Company for $11.00 each instead of the company's regular price of $17.00 each. The following income statement is for the 65,600 units of the product that X Company has already made and sold to its regular customers:

Sales

$1,115,200   

Cost of goods sold

   574,656   

Gross margin

$540,544   

Selling and administrative costs

     157,440   

Profit

$383,104   

For the year, fixed cost of goods sold were $129,232, and fixed selling and administrative costs were $66,256. The special order product has some unique features that will require additional material costs of $0.77 per unit and the rental of special equipment for $3,500.

4. Profit on the special order would be

Answer 1

Answer is given below