Variable selling and administrative costs Fixed selling and administrative costs Total costs $ Selling price per case 32 $ 100 8 The company has received a special order for 5,000 suitcases at a price of $100 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $20 per suitcase. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations. 120
Variable selling and administrative costs Fixed selling and administrative costs Total costs $ Selling price per case 32 $ 100 8 The company has received a special order for 5,000 suitcases at a price of $100 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $20 per suitcase. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations. 120
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format thanku
![Alpine Luggage has a capacity to produce 200,000 suitcases per year. The company is currently producing and selling 80,000 units per
year at a selling price of $160 per case. The cost of producing and selling one case follows.
Variable manufacturing costs
Fixed manufacturing costs
Variable selling and administrative costs
Fixed selling and administrative costs
Total costs
Selling price per case
Variable manufacturing costs
Fixed manufacturing costs
Variable selling and administrative costs
Fixed selling and administrative costs
The company has received a special order for 5,000 suitcases at a price of $100 per case. It will not have to pay any sales commission
on the special order, so the variable selling and administrative costs would be only $20 per suitcase. The special order would have no
effect on total fixed costs. The company has rejected the offer based on the following computations.
Net profit (loss) per case
Sales revenue
Variable costs:
Manufacturing
Selling and
administrative
Contribution
margin
Fixed costs
Operating Profit
$ 100
Status Quo
80.000 Units
$
(All revenues and costs in $000)
64
16
20
8
$ (8
Required:
a. What is the impact on profit for the year if Alpine accepts the special order?
64
16
32
8
120
)
Alternative
85,000 Units
Difference](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F902b6328-d5d0-4c0b-8290-aafdf8186a48%2Fac25beca-4486-4241-97f1-1a37503fc345%2F4mlerk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Alpine Luggage has a capacity to produce 200,000 suitcases per year. The company is currently producing and selling 80,000 units per
year at a selling price of $160 per case. The cost of producing and selling one case follows.
Variable manufacturing costs
Fixed manufacturing costs
Variable selling and administrative costs
Fixed selling and administrative costs
Total costs
Selling price per case
Variable manufacturing costs
Fixed manufacturing costs
Variable selling and administrative costs
Fixed selling and administrative costs
The company has received a special order for 5,000 suitcases at a price of $100 per case. It will not have to pay any sales commission
on the special order, so the variable selling and administrative costs would be only $20 per suitcase. The special order would have no
effect on total fixed costs. The company has rejected the offer based on the following computations.
Net profit (loss) per case
Sales revenue
Variable costs:
Manufacturing
Selling and
administrative
Contribution
margin
Fixed costs
Operating Profit
$ 100
Status Quo
80.000 Units
$
(All revenues and costs in $000)
64
16
20
8
$ (8
Required:
a. What is the impact on profit for the year if Alpine accepts the special order?
64
16
32
8
120
)
Alternative
85,000 Units
Difference
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