The above data is based on a normal activity level of 60000


Question - The cost of producing and selling one regular pizza at Pizza Hut is:

Direct Materials $5.1

Direct labor $3.8

Variable manufacturing overhead $1.0

Fixed manufacturing overhead $4.2

The above data is based on a normal activity level of 60,000 pizzas per year. The normal selling price is $21 per pie. A special order has been received by Pizza Hut for 150 pizzas at a special price of $14 each. This order would not affect regular sales and all its fixed costs.

Required: show your work

If the order is accepted,

1) What would be the total incremental revenue?

2) What would be the total incremental costs?

3) By how much will annual profits be increased or decreased?

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Accounting Basics: The above data is based on a normal activity level of 60000
Reference No:- TGS02615812

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