Crandle Manufacturers Inc. is approached by a potential customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers:

What is the change in operating profits if the one-time-only special order for 1,030 units is accepted for $550 a unit by Crandle?
A) $164,800 increase in operating profits
B) $164,170 increase in operating profits
C) $164,170 decrease in operating profits
D) $164,800 decrease in operating profits

Question

Crandle Manufacturers Inc. is approached by a potential customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers:

What is the change in operating profits if the one-time-only special order for 1,030 units is accepted for $550 a unit by Crandle?

What is the change in operating profits if the one-time-only special order for 1,030 units is accepted for $550 a unit by Crandle?
A) $164,800 increase in operating profits 
B) $164,170 increase in operating profits 
C) $164,170 decrease in operating profits 
D) $164,800 decrease in operating profits

Quizplus · Accepted Answer

Contribution margin per unit = $550 - ($130 + $60 + $105 + $95) = $160
Change in operating profit = 1,030 × $160 = $164,800 increase