Alpine Luggage has a capacity to produce 200,000 suitcases per year. The company is currently producing and selling 80,000 unit per year at a selling price of $160 per case. The cost of producing and selling one case follows. Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs Selling price per case Variable manufacturing costs $ 64 16 32 The company has received a special order for 5,000 suitcases at a price of $100 per case. It will not have to pay any sales commiss on the special order, so the variable selling and administrative costs would be only $20 per suitcase. The special order would have effect on total fixed costs. The company has rejected the offer based on the following computations. Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case 8 $120 $ 100 64 16 20 8 $ (8) Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select
Alpine Luggage has a capacity to produce 200,000 suitcases per year. The company is currently producing and selling 80,000 unit per year at a selling price of $160 per case. The cost of producing and selling one case follows. Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs Selling price per case Variable manufacturing costs $ 64 16 32 The company has received a special order for 5,000 suitcases at a price of $100 per case. It will not have to pay any sales commiss on the special order, so the variable selling and administrative costs would be only $20 per suitcase. The special order would have effect on total fixed costs. The company has rejected the offer based on the following computations. Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case 8 $120 $ 100 64 16 20 8 $ (8) Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Alpine Luggage has a capacity to produce 200,000 suitcases per year. The company is currently producing and selling 80,000 units
per year at a selling price of $160 per case. The cost of producing and selling one case follows.
Variable manufacturing costs
Fixed manufacturing costs
Variable selling and administrative costs
Fixed selling and administrative costs
Total costs
Selling price per case
Variable manufacturing costs
$ 64
16
The company has received a special order for 5,000 suitcases at a price of $100 per case. It will not have to pay any sales commission
on the special order, so the variable selling and administrative costs would be only $20 per suitcase. The special order would have no
effect on total fixed costs. The company has rejected the offer based on the following computations.
Fixed manufacturing costs
Variable selling and administrative costs
Fixed selling and administrative costs
Net profit (loss) per case
32
8
$ 120
$ 100
64
16
20
8
$ (8)
Required:
a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select
option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.)
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