Beta is approached by a customer to fulfill a one-time-only special order. Beta has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $120 Direct labor 60 Manufacturing support 105 Marketing costs 45 Fixed costs: Manufacturing support 135 Marketing costs 45 Total costs 510 Markup (50%) 255 Targeted selling price $765 15) What is the full cost of the product per unit? 16) What is the contribution margin per unit? 17) For Beta, at what price per unit of this special order would operating income be the same whether or not it accepted the special order? 18) What is the change in operating income for Beta if the one-time-only special order for 1,000 units is accepted for $540 a unit?
Beta is approached by a customer to fulfill a one-time-only special order. Beta has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $120 Direct labor 60 Manufacturing support 105 Marketing costs 45 Fixed costs: Manufacturing support 135 Marketing costs 45 Total costs 510 Markup (50%) 255 Targeted selling price $765 15) What is the full cost of the product per unit? 16) What is the contribution margin per unit? 17) For Beta, at what price per unit of this special order would operating income be the same whether or not it accepted the special order? 18) What is the change in operating income for Beta if the one-time-only special order for 1,000 units is accepted for $540 a unit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Beta is approached by a customer to fulfill a
one-time-only special order. Beta has excess
capacity. The following per unit data apply for
sales to regular customers:
Variable costs:
Direct materials $120
Direct labor
60
Manufacturing support 105
Marketing costs 45
Fixed costs:
Manufacturing support 135
Marketing costs 45
Total costs
510
Markup (50%) 255
Targeted selling price
$765
15) What is the full cost of the product per unit?
16) What is the contribution margin per unit?
17) For Beta, at what price per unit of this special
order would operating income be the same
whether or not it accepted the special order?
18) What is the change in operating income for
Beta if the one-time-only special order for 1,000
units is accepted for $540 a unit?
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VIEWStep 4: Part (17) Computation of the special order price per unit:
VIEWStep 5: Part (18) Computation of the change in the operating income:
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