Genia Enterprises, Inc. has the capacity to produce 12,000 units per year. Expected operations for the year are: Sales (10,000 units @ $20) $200,000 Manufacturing expenses: Variable Fixed Marketing expenses: Variable Fixed $8 per unit $40,000 $3 per unit $20,000 a. What is the expected level of operating profits? b. Should the company accept a special order for 1,000 units at a selling price of $15 if variable marketing expenses associated with this special order would be $2 per unit? Calculate the incremental profits if the order is accepted. c. Suppose the company received a special order for 3,000 units at a selling price of $15 with no variable marketing expenses. Calculate the impact on operating profits. Note that the expected level of operations for the company is 10,000 units, maximum capacity of production for the company is 12,000 units. Show your work.

Genia Enterprises, Inc. has the capacity to produce 12,000 units per year. Expected operations for the year are: Sales (10,000 units @ $20) $200,000 Manufacturing expenses: Variable Fixed Marketing expenses: Variable Fixed $8 per unit $40,000 $3 per unit $20,000 a. What is the expected level of operating profits? b. Should the company accept a special order for 1,000 units at a selling price of $15 if variable marketing expenses associated with this special order would be $2 per unit? Calculate the incremental profits if the order is accepted. c. Suppose the company received a special order for 3,000 units at a selling price of $15 with no variable marketing expenses. Calculate the impact on operating profits. Note that the expected level of operations for the company is 10,000 units, maximum capacity of production for the company is 12,000 units. Show your work.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 36P: Faldo Company produces a single product. The projected income statement for the coming year, based...

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