Question

Capitol has received a special order for 2,190 units of its product at a special price of $158. The product normally sells for $219 and has the following manufacturing costs:   

 

 

If Capital accepts the order, what effect will the order have on the company’s short-term profit?

 

What minimum price should Capital charge to achieve a $48,000 incremental profit? (Round your answerto 2 decimal places.)

 

Now assume Capital 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?

 

Per unit

  Direct materials

$

58

 

  Direct labor

 

38

 

  Variable manufacturing overhead

 

28

 

  Fixed manufacturing overhead

 

48

 

 

 

 

 

      Unit cost

 

172