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Excellent Manufacturers Inc. has a current production level of​ 20,000 units per month. Unit costs at this level​ are:   Direct materials ​$0.26   Direct labor 0.40   Variable overhead 0.16   Fixed overhead 0.21   Marketing − fixed 0.25   ​Marketing/distribution − variable 0.42     Current monthly sales are​ 18,000 units. Jax Company has contacted Excellent about purchasing​ 1,550 units at​ $2.00 each. Current sales would NOT be affected by the one−time−only special​ order, and variable​ marketing/distribution costs would NOT be incurred on the special order. What is Ratzlaff​ Company's change in operating profits if the special order is​ accepted?

Excellent Manufacturers Inc. has a current production level of​ 20,000 units per month. Unit costs at this level​ are:   Direct materials ​$0.26   Direct labor 0.40   Variable overhead 0.16   Fixed overhead 0.21   Marketing − fixed 0.25   ​Marketing/distribution − variable 0.42     Current monthly sales are​ 18,000 units. Jax Company has contacted Excellent about purchasing​ 1,550 units at​ $2.00 each. Current sales would NOT be affected by the one−time−only special​ order, and variable​ marketing/distribution costs would NOT be incurred on the special order. What is Ratzlaff​ Company's change in operating profits if the special order is​ accepted?

Financial And Managerial Accounting
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter21: Variable Costing For Management analysis
Section: Chapter Questions
Problem 4CMA: Bethany Company has just completed the first month of producing a new product but has not yet...
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Excellent Manufacturers Inc. has a current production level of​ 20,000 units per month. Unit costs at this level​ are:
 
Direct materials
​$0.26
 
Direct labor
0.40
 
Variable overhead
0.16
 
Fixed overhead
0.21
 
Marketing
−
fixed
0.25
 
​Marketing/distribution
−
variable
0.42
 
 
Current monthly sales are​ 18,000 units. Jax Company has contacted Excellent about purchasing​ 1,550 units at​ $2.00 each. Current sales would NOT be affected by the
one−time−only
special​ order, and variable​ marketing/distribution costs would NOT be incurred on the special order. What is Ratzlaff​ Company's change in operating profits if the special order is​ accepted?
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