Question No. 3 (20 minutes) Gleason manufactures a single product with the following full unit...
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Question No. 3 (20 minutes) Gleason manufactures a single product with the following full unit costs for 6,000 units: Direct materials Direct labor Manufacturing overhead (40% variable) Selling expenses (60% variable) Administrative expenses (10% variable) Total per unit $160 80 240 80 40 $600 A company recently approached Gleason with a special order to purchase 1,000 units for $550. Gleason currently sells the models to dealers for $1,100 per unit.. Capacity is sufficient to produce the extra 1,000 units. No selling expenses would be incurred on the special order. a)Calculate Gleason's existing contribution margin on production and sales of 6,000 units b) Calculate the impact on contribution margin of accepting the order and conclude if the order should be accepted to maximize short term profit ? c.Calculate the minimum price Gleason would want in order to increase pre-tax profit by $ 60,000 if this special order was accepted
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a Calculate Gleasons existing contribution margin on production and sales of 6000 units Contribution Margin CM per Unit Contribution Margin per unit Selling Price Variable Costs 1 Selling Price per Unit 1100 2 Variable Costs per Unit Direct Materials 160 Direct Labor 80 Variable Manufacturing Overhead 40 of 240 96 Variable Selling Expenses 60 of 80 48 Variable Administrative
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