What profits will if joe soup plant accepts the offer

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Joe's Soup plant is running at 52% of its monthly capacity. Joe's Soup plant has just received a special order to produce 400 cases of mushroom noodle soup for a statewide supermarket. The supermarket will sell the soup under its own private brand label. The soup will be the same in all respects, except for the label, which will cost Joe's Soup plant an extra $500 in total to design. The supermarket has offered to pay only $19.00 per case, which is well under Joe's normal sales price.

Costs at the current production level (450 cases) are as follows:

Manufacturing Costs                          Total Cost                         Cost per Case

Direct materials                               $4,500                              $10.00

Direct labor                                    1,350                                  3.00

Variable MOH                                        900                                 2.00

Fixed MOH                                        2,700                                  6.00

Total                                                $9,450                               $21.00

Question 1: If Joe's Soup plant accepts the offer, profits will:

Reference no: EM132514906

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