Question

At the end of the year, a company offered to buy 4,110 units of a product from X Company for $11.00 each instead of the company's regular price of $19.00 each. The following income statement is for the 61,600 units of the product that X Company has already made and sold to its regular customers:

Sales		$1,170,400
Cost of goods sold		530,992
Gross margin		$639,408
Selling and administrative costs		161,392
Profit		$478,016

For the year, fixed cost of goods sold were $134,904, and fixed selling and administrative costs were $79,464. The special order product has some unique features that will require additional material costs of $0.85 per unit and the rental of special equipment for $2,000.

4. Profit on the special order would be

Tries 0/3

5. The marketing manager thinks that if X Company accepts the special order, regular customers will be lost unless the selling price for them is reduced by $0.20. The effect of reducing the selling price will be to decrease firm profits by

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE