Glascro Manufacturing Company had the following unit costs:

Direct materials $20

Direct labor 10

Variable overhead 15

Fixed overhead (allocated) 20

A one-time customer has offered to buy 3,000 units at a special price of $60 per unit. Assuming that sufficient unused production capacity exists to produce the order and no regular customers will be affected by the order, how much additional profit or loss will be generated by accepting the special order?

a. $22,000 profit

b. $36,000 loss

c. $57,000 loss

d. $45,000 profit

Question

Douglas Scott

Business

23 October, 22:41

Glascro Manufacturing Company had the following unit costs:

Direct materials $20

Direct labor 10

Variable overhead 15

Fixed overhead (allocated) 20

A one-time customer has offered to buy 3,000 units at a special price of $60 per unit. Assuming that sufficient unused production capacity exists to produce the order and no regular customers will be affected by the order, how much additional profit or loss will be generated by accepting the special order?

a. $22,000 profit

b. $36,000 loss

c. $57,000 loss

d. $45,000 profit

+1

Answers (1)

Know the Answer?

Lilliana Ball · Answer 1

The correct answer is D.

Explanation:

Giving the following information:

Glascro Manufacturing Company had the following unit costs:

Direct materials $20

Direct labor 10

Variable overhead 15

Fixed overhead (allocated) 20

A one-time customer has offered to buy 3,000 units at a special price of $60 per unit.

Because there is unused capacity and it is a special offer, we will not have into account the fixed costs.

Unitary cost = 20 + 10 + 15 = 45

Gross profit = (60 - 45) * 3000 = $45,000