Question

Waterloo Co. sells product P-14 at a price of $48 a unit. The per-unit cost data are direct materials $16, direct labour $11, and overhead $16 (75% variable). Waterloo Co. has sufficient capacity to accept a special order for 35,300 units, but at a discount of 25% from the regular price. Selling costs associated with this order would be $4 per unit. Determine whether Waterloo Co. should accept the special order. (Enter loss with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)

Question 1 Your answer is partially correct. Try again. Waterloo Co. sells product P-14 at a price of $48 a unit. The per-unit cost data are direct materials $16, direct labour $11, and overhead $16 (75% variable). Waterloo Co. has sufficient capacity to accept a special order for 35,300 units, but at a discount of 25% from the regular price. Selling costs associated with this order would be $4 per unit. Determine whether Waterloo Co. should accept the special order. (Enter loss with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) IX Incremental income (loss) -385300 Waterloo Co. should not accept the special order. LINK TO TEXT

Answer 1

Revenue from special order

= [(48-25%) - Selling cost 4] * 35,300 units

= 1,129,600

Cost of making

= [16 + 11 + (75%*16)]*35,300

= 1,376,700

Incremental loss = -247,100