Question

Main Menu Contents Grades - Timer Notes Evaluate Feedback Print Course Contents SECOND CHANCE EXAM 2 Questions 5, 6, & 7 Questions 5, 6, and 7 refer to the following information Last year, X Company sold 61,900 units of its only product for $19.00 each. Total costs were as follows: Cost of goods sold Variable Fixed Selling and administrative Variable Fixed $393,684 118,648 $64,376 82,946 At the end of the year, a company offered to buy 4.400 units of the product but only for $11.00 each. X Company had the capacity to produce the additional units, and even though there would have been no additional selling and administrative costs, tracted the offer 5. 11 X Company had accepted the special order, firm profits would have increased by Somt Answer Tries 0/3 5. X Company's production manager thought that the special order units might have required additional direct material and direct labor costs per unit of $0.38 and 30.26, respectively. and the rental of special equipment for $1,000. The combined effect of these changes would have been to reduce the special order profit by S ewer Tries 0/3 7. X Company's marketing manager felt that in order for regular sales to continue at 61.900 units this year, the company would have had to reduce the regular sing price this year to $18.52. The result of this price reduction would have been to reduce X Company profits this year by Som Tries 0/3 . Communication Blocked Send Feedback Blog post d a

Answer 1

5	Variable cost of goods sold per unit =$393,684/61,900 units =$6.36 per unit
	Variable selling and admin cost and Fixed costs are irrelivant for decision making.
	No. of units sold for special order	4,400 units
	Sales price	$19.00
	Variable cost of goods sold	$6.36
	Profit per unit	$12.64
	Increase in Firm's Profit(4,400 units*$12.64)	$55,616
6	Increase in direct materials cost(4,400 units*$0.88)	$3,872
	Increase in direct labor cost(4,400 units*$0.26)	$1,144
	Special Equipment rent	$1,000
	Firm's Profit will decrease by this much:	$6,016
7	Due to the change X's company profit would decrease by $29,712[($19.00-$18.52)*61,900]