Question - At the end of the year, a company offered to buy 4,340 units of a product from X Company for a special price of $12.00 each instead of the company's regular price of $18.00 each. The following information relates to the 60,500 units of the product that X Company made and sold to its regular customers during the year:
|
|
Per-Unit
|
Total
|
|
Cost of goods sold
|
$7.84
|
$474,320
|
|
Period costs
|
2.77
|
167,585
|
|
Total
|
$10.61
|
$641,905
|
Fixed cost of goods sold for the year were $111,925, and fixed period costs were $79,255. Variable period costs include selling commissions equal to 2% of revenue.
Required -
1. Profit on the special order is?
2. Assume the following two changes for the special order: 1) variable cost of goods sold will decrease by $0.83 per unit, and 2) there will be no selling commissions. What will be the effect of these two changes on the special order profit?
Attachment:- Assignment.png