Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 96,000 units per year is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 1.70 3.00 Annual profits would $.80 $ by 4.05 $1.30 $ The normal selling price is $20 per unit. The company's capacity is 111,600 units per year. An order has been received from a mail-order house for 1,300 units at a special price of $17.00 per unit. This order would not affect regular sales. 2.00 Required: 1. If the order is accepted, by how much will annual profits be increased or decreased? (The order will not change the company's total fixed costs.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Delta Company produces a single product. The cost of producing and selling a single
unit of this product at the company's normal activity level of 96,000 units per year is:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative
expenses
Fixed selling and administrative
expenses
$ 1.70
3.00
Annual profits would
$.80
$
by
4.05
$1.30
$
The normal selling price is $20 per unit. The company's capacity is 111,600 units per year.
An order has been received from a mail-order house for 1,300 units at a special price of
$17.00 per unit. This order would not affect regular sales.
2.00
Required:
1. If the order is accepted, by how much will annual profits be increased or decreased?
(The order will not change the company's total fixed costs.)
Transcribed Image Text:Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 96,000 units per year is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 1.70 3.00 Annual profits would $.80 $ by 4.05 $1.30 $ The normal selling price is $20 per unit. The company's capacity is 111,600 units per year. An order has been received from a mail-order house for 1,300 units at a special price of $17.00 per unit. This order would not affect regular sales. 2.00 Required: 1. If the order is accepted, by how much will annual profits be increased or decreased? (The order will not change the company's total fixed costs.)
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