Question

Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 units of product that sell for $60 each. For the foreseeable future, regular sales volume should continue to equal normal capacity.

Direct material				$102,400
Direct labor				64,000
Variable manufacturing overhead				48,400
Fixed manufacturing overhead (Note 1)				38,400
Selling expense (Note 2)				35,200
Administrative expense (fixed)				15,000
				$303,400

Notes:
1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units or fraction thereof until a maximum capacity of 10,000 units is reached.
2. Selling expenses consist of a 6% sales commission and shipping costs of 80 cents per unit. Glendale pays only three-fourths of the regular sales commission on sales totaling 501 to 1,000 units and only two-thirds the regular commission on sales totaling 1,000 units or more.

Glendale's sales manager has received a special order for 1,200 units from a large discount chain at a price of $36 each, F.O.B. factory. The controller's office has furnished the following additional cost data related to the special order:

1. Changes in the product's design will reduce direct material costs $1.50 per unit.
2. Special processing will add 20% to the per-unit direct labor costs.
3. Variable overhead will continue at the same proportion of direct labor costs.
4. Other costs should not be affected.

a. Present an analysis supporting a decision to accept or reject the special order. (Round computations to the nearest cent.)

Differential Analysis

Differential Revenue: $43200

Differential Cost:

Direct Material: $11.3/unit

Direct Labor: $9.6/unit

Variable MOH: $7.26/unit

Selling:

Commission: NEED ANSWER (2.4/unit is incorrect)

Shipping (F.O.B. factory terms): NEED ANSWER (0.8/unit is incorrect)

Total Variable Cost: NEED ANSWER (31.36/unit and 37632 total is incorrect)

Contribution Margin from Special Order: NEED ANSWER (5,568 is incorrect)

Fixed Cost Increment:

Extra Cost: $5400

Profit on Special Order: $168 NEED ANSWER (168 is incorrect)

b. What is the lowest price Glendale could receive and still make a profit of $3,600 before income taxes on the special order?

Round answer to two decimal places, if applicable.

NEED ANSWER $38.86 is incorrect.