Glade Company produces a single product. The costs of producing and selling a single unit...
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Accounting
Glade Company produces a single product. The costs of producing and selling a single unit of this product at the company's current activity level of 8,000 units per month are:
Direct materials
$2.50
Direct labor
$3.00
Variable manufacturing overhead
$0.50
Fixed manufacturing overhead
$4.25
Variable selling and administrative expenses
$1.50
Fixed selling and administrative expenses
$2.00
The normal selling price is $15 per unit. The company's capacity is 10,000 units per month. An order has been received from a potential customer overseas for 2,000 units at a price of $12.00 per unit. This order would not affect regular sales. Required:
Should Glade accept the offer? If the order is accepted, by how much will monthly profits increase or decrease?
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