Roswell company produces rakes and has received special order for 250 at a price at $10...
Roswell company produces rakes and has received special order for 250 at a price at $10 per rake. The company's normal selling price is $15 and each rake costs $8 in variable costs and $4 in fixed overhead. The company has capacity to fill the order. Of the company accepted te order, how much would profit increase or decrease?
Please give the formula and steps on how you solved this problem.
Homework Answers
Company has received an order of 250 Units at a price of Rs.10.
Variable cost Rs.8 and fixed cost Rs.4.
If company agrees the order
Profit/Loss=No of units (Selling price -Variable cost)
=250(10-8)
=500 =Profit
If company agrees the order company get profit of 500.
NOTE
Company already recovered the fixed cost.so we are not considering fixed cost in the problem.
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