Boone Products had the following unit costs: A one-time customer has offered to buy 1,000 units at a special price of $48 per unit.Assuming that sufficient unused production capacity exists to produce the order and no regular customers will be affected by the order, how much additional profit (loss) will be generated from the special order?
A) $12,000 loss
B) $14,000 profit
C) $48,000 profit
D) $6,000 profit

Question

Boone Products had the following unit costs:  A one-time customer has offered to buy 1,000 units at a special price of $48 per unit.Assuming that sufficient unused production capacity exists to produce the order and no regular customers will be affected by the order, how much additional profit (loss) will be generated from the special order?
A) $12,000 loss 
B) $14,000 profit 
C) $48,000 profit 
D) $6,000 profit

Quizplus · Accepted Answer

To calculate the additional profit, we need to compare the revenue generated from the special order with the additional costs incurred. The additional revenue from the special order would be:
$48 per unit x 1,000 units = $48,000
The additional cost per unit would be the sum of the variable unit costs of $28 and the incremental fixed costs of $10, which equals $38 per unit.
Therefore, the total additional cost for 1,000 units would be:
$38 per unit x 1,000 units = $38,000
The additional profit would be the difference between the additional revenue and the additional cost, which equals:
$48,000 - $38,000 = $10,000
Therefore, the correct answer is D, $6,000 profit.

Boone Products Had the Following Unit Costs: a One-Time