Winter Grow Inc. manufactures a range of heat mats. The production information for its standard heat mat is follows:Production Information for Standard Heat MatProduction InformationAmountMonthly production capacity25,000 unitsCurrent level of production 18,000 unitsNormal selling price per unit $23 per unitVariable manufacturing costs $5 per unitVariable selling and administrative expenses$2 per unitFixed manufacturing costs (allocated)$4 per unitFixed selling and administrative expenses (allocated)$2 per unitDuring current month, the company received an offer to sell 5,000 lights to an exporter for $13 per unit. The variable selling and administrative expenses per unit will be reduced by $1 as this is a one-off offer and some of the selling expenses would not be payable on this offer. Acceptance of this order does not affect the pricing policy in the domestic market.How much would be the profit or loss from the acceptance of this offer?Group of answer choices$35,000 profit$35,000 loss$75,000 profit$40,000 loss

The objective of this question is to calculate the profit or loss from the acceptance of an offer to…

Answered: Winter Grow Inc. manufactures a range…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

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Question

Winter Grow Inc. manufactures a range of heat mats. The production information for its standard heat mat is follows:

Production Information for Standard Heat Mat

Production Information	Amount
Monthly production capacity	25,000 units
Current level of production	18,000 units
Normal selling price per unit	$23 per unit
Variable manufacturing costs	$5 per unit
Variable selling and administrative expenses	$2 per unit
Fixed manufacturing costs (allocated)	$4 per unit
Fixed selling and administrative expenses (allocated)	$2 per unit

During current month, the company received an offer to sell 5,000 lights to an exporter for $13 per unit. The variable selling and administrative expenses per unit will be reduced by $1 as this is a one-off offer and some of the selling expenses would not be payable on this offer. Acceptance of this order does not affect the pricing policy in the domestic market.

How much would be the profit or loss from the acceptance of this offer?

Group of answer choices

$35,000 profit

$35,000 loss

$75,000 profit

$40,000 loss

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