Below is a projected income statement for the coming month (Based on selling 30,000 units)
Dollars Per unit
Sales revenue $600,000 $600,000/30,000 units = $20.00
Variable cost of goods sold (225,000) $225,000/30,000 units = $7.50
Variable marketing costs (150,000) $150,000/30,000 units = $5.00
Contribution margin 225,000 $225,000/30,000 units = $7.50
Fixed cost of goods sold (135,000)
Fixed marketing costs ( 60,000)
Operating Income $ 30,000
The company has a special (one-time) order for 5,000 units to be purchased at a sales price of $11 per unit. Should they sell these 5,000 units for $11?
In addition, no marketing costs will be necessary for the 5,000 one-time-only special order.
YOU MUST SHOW YOUR CALCULATONS TO SUPPORT YOUR ANSWER. PLEASE INDICATE EITHER
THE INCREMENTAL PROFIT TO BE MADE IF YOU ACCEPT THIS ORDER or
THE LOSS THAT WOULD BE INCURRED SUPPORTING THE DECISION TO NOT ACCEPT THIS ORDER.