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Question - The cost of producing and selling one regular pizza at Pizza Hut is:
Direct Materials $5.1
Direct labor $3.8
Variable manufacturing overhead $1.0
Fixed manufacturing overhead $4.2
The above data is based on a normal activity level of 60,000 pizzas per year. The normal selling price is $21 per pie. A special order has been received by Pizza Hut for 150 pizzas at a special price of $14 each. This order would not affect regular sales and all its fixed costs.
Required: show your work
If the order is accepted,
1) What would be the total incremental revenue?
2) What would be the total incremental costs?
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