General Accounting Brighton Manufacturing has received a special order for 12,000 units of its product ata special price of $18 per unit. The product normally sells for $25 per unit and has thefollowing manufacturing cost per unit:• Direct Materials = $7•••.Direct Labor = $4Variable Manufacturing Overhead = $3Fixed Manufacturing Overhead = $5Total Unit Cost = $19Brighton is currently operating at full capacity, meaning it cannot fulfil the specialorder without reducing its normal sales.What effect would accepting the special order have on Brighton's short-term profit?

Step 1: Definition of Contribution MarginContribution Margin is the amount by which a product's…

Answered: Brighton Manufacturing has received a…

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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A company has received a special order for 2,030 units of its product at a special price of $153. The product normally sells for $203 and has the following manufacturing costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost Cost per Unit $53 33 23 43 $152 Assume there is sufficient capacity to fill the order without harming normal production and sales. Required: a. If the order is accepted, what effect will it have on the company's short-term profit? b. What minimum unit price should the compnay charge to achieve a $43,000 incremental profit? c. Now, assume the company is currently operating at full capacity and cannot fill the order without harming normal production and sales. If the order is accepted, what effect will it have on the company's short-term profit? Complete this question by entering your answers in the tabs below. Required B Required A Required C If Capitol accepts the order, what effect will the order have on…
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Capitol, Incorporated has received a special order for 2,000 units of its product at a special price of $195. The product normally sells for $260 and has the following manufacturing costs: Cost per Unit Direct materials $ 78 Direct labor 52 Variable manufacturing overhead 39 Fixed manufacturing overhead 65 Total unit cost $ 234 Assume that Capitol has sufficient capacity to fill the order without harming normal production and sales. Required: If Capitol accepts the order, what effect will the order have on the company’s short-term profit? What minimum unit price should Capitol charge to achieve a $65,000 incremental profit? Now, assume Capitol is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Capitol accepts the order, what effect will the order have on the company’s short-term profit?
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