Question

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 1

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