Beachwood Classics makes furniture for children. It has received a special order for 1,500 units that will require it to sell a unit (a table and two chairs) for $35. The regular average selling price is $40 per unit. The unit product cost is broken down as follows: direct labor, $5.50; direct materials, $8.75; variable overhead, $1.75; and fixed overhead, $3.25. The company had already budgeted its production at 6,500 units. If the company has spare capacity, what will be the incremental contribution of the special order to operating profit? A: $28,500 B: $31,125 C: $23,625 D: $21,000
Beachwood Classics makes furniture for children. It has received a special order for 1,500 units that will require it to sell a unit (a table and two chairs) for $35. The regular average selling price is $40 per unit. The unit product cost is broken down as follows: direct labor, $5.50; direct materials, $8.75; variable overhead, $1.75; and fixed overhead, $3.25. The company had already budgeted its production at 6,500 units. If the company has spare capacity, what will be the incremental contribution of the special order to operating profit? A: $28,500 B: $31,125 C: $23,625 D: $21,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Beachwood Classics makes furniture for
children. It has received a special order for
1,500 units that will require it to sell a unit
(a table and two chairs) for $35. The regular
average selling price is $40 per unit. The
unit product cost is broken down as
follows: direct labor, $5.50; direct materials,
$8.75; variable overhead, $1.75; and fixed
overhead, $3.25. The company had already
budgeted its production at 6,500 units. If
the company has spare capacity, what will
be the incremental contribution of the
special order to operating profit?
A: $28,500
B: $31,125
C: $23,625
D: $21,000
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