Question

Golden Generator Supply is approached by Mr. Stephen, a new customer, to fulfill a large one-time-only special order for a product similar to one offered to regular customers. Golden Generator Supply has excess capacity. The following per unit data apply for sales to regular customers: Direct materials Direct manufacturing labor Variable manufacturing support Fixed manufacturing support Total manufacturing costs Markup (35% of total manufacturing costs) Estimated selling price $2,100.00 130.00 250.00 160.00 2,640.00 924.00 $3,564.00 If Golden Generator Supply accepts the order at $3,040, what is the amount contributed towards fixed costs and profit on a sales order of 1.000 units? O A. $560,000 O B. $810,000 OC. $400,000 OD. $1,084,000

Answer 1

Answert Given datar The following per unit data apply for sales to regular customers. Direct materials $ 2100.00 130.00 Direct manufacturing labor Variable manufacturing support fixed manufacturing supposite Tohal manufacturing couts 2640.00 Markup (2576 of total manufacturing costs) Estimated selling price 250.00 160.00 224.00 8564.00 Since 'the organisation has excen capacity and need not effect ots regular supply to fulfill special order. To full fell special order, only variable costs will be the cost incursiedle → Direct material + direct manufacturing labour + variable manufacturing support. = 2100 + 130 +2.50 - $ 2480 ' Selling price for this special order ů $ 3040. Thus, contribution per unit towarde fixed cont and profit is $ 3040 - $2480 - $560. Number of units = 1000 The total contribution is = $560*1000 $500,000/