Question

# X Company produces 67,700 units of its regular product each year and sells each one for...

X Company produces 67,700 units of its regular product each year and sells each one for \$14.00. The following cost information is available:

 Total Per-Unit Direct materials \$154,356 \$2.28 Direct labor 123,891 1.83 Variable overhead 199,715 2.95 Fixed overhead 137,431 2.03 Variable selling 89,364 1.32 Fixed selling 68,377 1.01 Total \$773,134 \$11.42

A company has offered to buy 4,070 units for \$13.71 each. Because the special order product is slightly different than the regular product, direct material costs will increase to \$2.48 per unit, and some special equipment will have to be rented for a total of \$13,000.

Question: What would profit on the special order be?

Answer-Profit on special order would be = \$7879.10.

Explanation-

 Profit on special order Partciulars Amount \$ Sales price 4070 units*\$13.71 per unit 55799.70 Less- Costs Direct materials 4070 units*\$2.48 per unit 10093.60 Direct labor 4070 units*\$1.83 per unit 7448.10 Variable overhead 4070 units*\$2.95 per unit 12006.50 Variable selling 4070 units*\$1.32 per unit 5372.40 Rent on special equipment 13000 Total costs 47920.60 Profit on special order 7879.10

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