Answer:
Profit from sale of special order = $77,900 - $33,610 = $44,290
Explanation:
Being a special order and an added opportunity to its regular sales of S47, we will be looking at the Marginal Costs of accepting to produce the order:
Direct Material = $4.30
Direct Labour = $4.00
Variable Overhead = $3.60
Fixed Manufacturing Overhead = $6.30
Total Costs = $18.20
But, Fixed Costs is already covered/absorbed by our existing business; as such we need not include it in the costing of the special order
And there is an Additional investment in moulds = $11,000
Total cost of special order = ($18.20 - $6.30) x 1,900 units + $11,000
= $33,610
Sales of special order = 1,900 units x $41 =$77,900
Profit from sale of special order = $77,900 - $33,610 = $44,290
