Each month Newton Company produces 30,000 units of a product that has variable costs of $70 per unit.Total fixed costs for the month are $990,000.A special order is received for 1,000 units at a price of $77 per unit.Newton Company has adequate capacity for the special order.If Newton Company accepts the special order,what is the profit to Newton Company?
A)There is no profit; it is loss.
B)$7,000
C)$21,000
D)$210,000

Question

Quizplus · Accepted Answer

The profit from the special order is calculated by taking the special order price per unit ($77) minus the variable cost per unit ($70), which gives a profit of $7 per unit. For 1,000 units, the total profit is 1,000 units * $7 = $7,000. Fixed costs are not considered as they remain unchanged.

Each Month Newton Company Produces 30,000 Units of a Product