What is the contribution to profit from accepting the order

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Reference no: EM133011239

Question - Variable costs and fixed costs for the current activity level of a manufacturer is as follows:

Production costs

Variable costs:

Manufacturing:

Direct labour $375 000

Direct material $262 500

Marketing $187 500

Total variable costs $825 000

Fixed costs:

Manufacturing $275 000

Marketing $175 000

Total fixed costs $450 000

Total costs $1 275 000

Variable cost per unit $110

Fixed cost per unit $60

Average unit cost $170

Current monthly production is 7,500 units. The firm has just received a special one-time order for 2,538 products at $128 per unit. For this particular offer, no variable marketing costs will be incurred. What is the contribution to profit from accepting the special order?

Reference no: EM133011239

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