Question

0/5 points Previous Answers Question 1. (special order) You sell high-quality fake IDs to college students at a regular price of $80. Your financial results for 20x9 are summarized in the following contribution margin statement: 120x9 Sales volume (-units) 80 Revenue 56.400 Variable costs $2.400 Contribution margin 154.000 Fixed costs $1,400 Profit $2,600 Special order: You have been approached by a client who wants to buy 15 units at a discounted price of $35 per unit. You have enough spare capacity to fulfill this special order without cutting Required: 1. Compute total profit with the special order (total for the regular business plus the special order). To do that compute total revenue, costs, ete with special order: Total revenues x Total VC=S Total CMES Total FC=5 Profit = 5 2. Make a decision based on total profits with and without the special order. Should you take this special order? (enter 1 if yes, 2 if no)

Answer 1

Statement of Net Income
	Without special order	With special order
Revenue[(15 units*$35)+(80 units*$80)]	$6,400	$6,925
Variable costs[(15 units*$30)+(80 units*$30)]	$2,400	$2,850
Contribution margin	$4,000	$4,075
Fixed costs	$1,400	$1,400
Profit	$2,600	$2,675
Yes the special order shoul be taken into account as it results into incremental profit of $75