Red Rose Manufacturers Inc. is approached by a potential customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $170 Direct labor 70 Manufacturing support 125 Marketing costs 75 Fixed costs: Manufacturing support 175 Marketing costs 55 Total costs 670 Markup (40%) 268 Targeted selling price $938 What is the change in operating profits if the one-time-only special order for 1000 units is accepted for $580 a unit by Red Rose? $139,330 decrease in operating profits $140,000 increase in operating profits $140,000 decrease in operating profits $139,330 increase in operating profits
Red Rose Manufacturers Inc. is approached by a potential customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers:
|
Variable costs: |
|
|
Direct materials |
$170 |
|
Direct labor |
70 |
|
Manufacturing support |
125 |
|
Marketing costs |
75 |
|
Fixed costs: |
|
|
Manufacturing support |
175 |
|
Marketing costs |
55 |
|
Total costs |
670 |
|
Markup (40%) |
268 |
|
Targeted selling price |
$938 |
What is the change in operating profits if the one-time-only special order for 1000 units is accepted for $580 a unit by Red Rose?
$139,330 decrease in operating profits
$140,000 increase in operating profits
$140,000 decrease in operating profits
$139,330 increase in operating profits
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