Question

- and 7 refer to the following information Company sold 66,900 units of its only product for $19.00 each Es only product for $19.00 each. Total costs were as follows: Cost of goods sold Variable S460,941 Fixed 131,124 Selling and administrative Variable $71,583 84.063 Fixed At the end of the year, a company offered capacity to produce the additional units, and even year, a company offered to buy 4.730 units of the product but only for $12.00 each. X Company had the the additional units, and even though there would have been no additional selling and administrative costs, it rejected the offer. pp. IX Company had accepted the special order, firm profits would have increased by 5. AO $13,119 BO $14,824 CO 816,751 DO 815,929 EO $21,390 FO $24,170 10 pt. X Company's production manager thought that the special order units might have required additional direct material and direct labor costs per unit of $0.83 and $0.2 effect of these changes would have been to reduce the special order profit by 6. AO $1,350 BO $1,957 CO 82,838 DO 84,115 EO $5,966 FO $8,651 8 pt 7. X Company's marketing manager felt that in order for regular sales to continue at 66,900 units this year, the company would have had to reduce the regular selling price this year to $18.69. The result of this price reduction would have been to reduce X Company's profits this year by 7. AO $15,150 BO $17,726 CO $20,739 DO 824,265 EO $28,390 FO $33,216

Answer 1

5
Variable cost of goods sold	6.89	=460941/66900
Incremental revenue	56760	=4730*12
Incremental costs:
Variable cost of goods sold	32590	=4730*6.89
Total Incremental costs	32590
Profits increase	24170
Option F $24,170 is correct
6
Increase in cost of goods sold	4966	=4730*(0.83+0.22)
Rental of Equipment	1000
Total effect on profit	5966
Option E $5,966 is correct
7
Reduction in Profits	20739	=66900*(19-18.69)
Option C $20,739 is correct