Able Company's unit manufacturing cost is: Variable Costs $\quad \$ 50$
Fixed Costs $\quad 25$ A special order for 2000 units has been received from a foreign company.The unit price requested is $55.The normal unit price is $80.If the order is accepted unit variable costs will increase by $2 for additional freight costs.If the order is accepted incremental profit (loss) will be

Question

Quizplus · Accepted Answer

The incremental profit is calculated by considering the additional revenue from the special order minus the additional variable costs. The revenue from the order is $2000 \times \$55 = \$110,000$. The variable cost per unit increases to $\$50 + \$2 = \$52$, so the total variable cost for the order is $2000 \times \$52 = \$104,000$. The incremental profit is $ \$110,000 - \$104,000 = \$6,000$. Fixed costs are not considered as they do not change with the order.

Able Company's Unit Manufacturing Cost Is: Variable Costs $50\quad \$ 50$50

Able Company's Unit Manufacturing Cost Is: Variable Costs $\quad \$ 50$