X Company produces and sells 60,500 units of its regular product each year for $13.00 each. The following cost information relates to this production:
|
Total |
Per-Unit |
| Direct materials |
$115,555 |
$1.91 |
| Direct labor [all variable] |
88,935 |
1.47 |
| Variable overhead |
165,165 |
2.73 |
| Fixed overhead |
121,000 |
2.00 |
| Variable selling |
78,045 |
1.29 |
| Fixed selling |
78,650 |
1.30 |
A company has offered to buy 4,650 units for $11.85 each. Because the special order product is slightly different than the regular product, X Company will have to rent some equipment at a cost of $16,000.
Profit on the special order is ?
Assume that if X Company accepts the special order, it will have to lower the selling price on each of its regular units to $12.51. Independent of #1, the effect of lowering the selling price will be to decrease company profits by?