Bingo Company produces a single product. The cost of producing and selling a single unit of this product at the company's normalactivity level of 60,000 units per year is as follows:Direct materialsDirect labourVariable manufacturing overheadFixed manufacturing overheadVariable selling and administrative expenseFixed selling and administrative expenseThe normal selling price is $25 per unit. The company's capacity is 75,000 units per year. An order has been received from a mail-order house for 15,000 units at a special price of $16 per unit. This order would not affect regular sales.Annual profits willRequired:1. If the order is accepted, by how much will annual profits be increased or decreased? (The order will not change the company's totalfixed costs.) (Do not round intermediate calculations.)$ 73Relevant cost2422.50byper unit2. This part of the question is not part of your Connect assignment.3. Assume the company has 1,000 units of this product left over from last year that are vastly inferior to the current model. The unitsmust be sold through regular channels at reduced prices. What unit cost figure is relevant for establishing a minimum selling price forthese units?

Decision making is a process or an act of deciding something using rational thinking, intuition and…

Answered: Bingo Company produces a single…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject:- Account
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