Cranberry has received a special order for 120 units of its product at a special

Question

Cranberry has received a special order for 120 units of its product at a special price of $2.300. The product normally sells for $2,800 and has the following manufacturing costs Direct materials Direct labor Variable manufacturing overhead Unit cost $2,440 Assume that Cranberry has sufficient capacity to titi the order without harming normal production and sales. If Cranberry accepts the order, what effect will the order have on the company's short-term profit? $79,200 decrease O $16,800 increase $16,800 decrease $62,400 increase Type here to search Esc 2 3 4 5 6 Q W E RTY

Explanation / Answer

Total variable cost for special order = 760+460+560 = 1780

Sale price for special order = 2300

Profit per unit of special order = 2300 - 1780 = 520

Total profit because of special order = 520*120 = 62400

Effect on company short term profit = 62400 increase

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