Question - At the end of the year, a company offered to buy 4,750 units of a product from it Company for a special price of $11.00 each instead of the company's regular price of $19.00 each. The following information relates to the 65,300 units of the product that X Company made and sold to its regular customers during the year:
|
|
Per-Unit
|
Total
|
|
Cost of goods sold
|
$9.09
|
$593,577
|
|
Period Costs
|
2.35
|
153,455
|
|
Total
|
$11.44
|
$747,032
|
Fixed cost of goods sold for the year were $141,045, and fixed period costs were $69,218. Variable period costs include selling commissions equal to 2% of revenue.
Required -
Profit on the special order is?
Assume the following two changes for the special order: 1] variable cost of goods sold will decrease by $0.76 per unit, and 2) there will be no selling commissions. What will be the effect of these two changes on the special order profit?