FromZetherz Company produced and sold 50000 units of product and is operating at 80% of plant capacity. Unit information about its product is as follows: $\begin{array}{llr}
\text { Sales Price } &&\$68\
\text {Variable manufacturing cost } &\$42\
\text { Fixed manufacturing cost $ (\$ 600,000 \div 50,000)$ } &12&54\
\text { Profit per unit } &&\$14
\end{array}$
The company received a proposal from a Danish company to buy 10000 units of FromZetherz Company's product for $49 per unit. This is a one-time only order and acceptance of this proposal will not affect the company's regular sales. The president of FromZetherz Company is reluctant to accept the proposal because he is concerned that the company will lose money on the special order.
Instructions
Prepare a schedule reflecting an incremental analysis of this proposal and indicate the effect the acceptance of this order might have on the company's income.

Question

FromZetherz Company produced and sold 50000 units of product and is operating at 80% of plant capacity. Unit information about its product is as follows: $\begin{array}{llr}
  \text { Sales Price } &&\$68\
 \text {Variable manufacturing cost   } &\$42\
 \text { Fixed manufacturing cost $ (\$ 600,000 \div 50,000)$ } &12&54\
 \text { Profit per unit } &&\$14
\end{array}$
 The company received a proposal from a Danish company to buy 10000 units of FromZetherz Company's product for $49 per unit. This is a one-time only order and acceptance of this proposal will not affect the company's regular sales. The president of FromZetherz Company is reluctant to accept the proposal because he is concerned that the company will lose money on the special order.
Instructions
Prepare a schedule reflecting an incremental analysis of this proposal and indicate the effect the acceptance of this order might have on the company's income.

Quizplus · Accepted Answer

The Answer of FromZetherz Company produced and sold 50000 units of product and is operating at 80% of plant capacity. Unit information about its product is as follows: $\begin{array}{llr}
  \text { Sales Price } &&\$68\
 \text {Variable manufacturing cost   } &\$42\
 \text { Fixed manufacturing cost $ (\$ 600,000 \div 50,000)$ } &12&54\
 \text { Profit per unit } &&\$14
\end{array}$
 The company received a proposal from a Danish company to buy 10000 units of FromZetherz Company's product for $49 per unit. This is a one-time only order and acceptance of this proposal will not affect the company's regular sales. The president of FromZetherz Company is reluctant to accept the proposal because he is concerned that the company will lose money on the special order.
Instructions
Prepare a schedule reflecting an incremental analysis of this proposal and indicate the effect the acceptance of this order might have on the company's income.

FromZetherz Company Produced and Sold 50000 Units of Product and Is