1. A manufacturing company produces and sells 20,000 units of a single product. Total products costs are $14 per unit. If total sales were $560,000 what markup percentage is the company using?
2. John's Pizza produced and sold 2,000 pizzas last month and had fixed costs of $6,000. If production and sales are expected to increase by 10% next month, which of the following statements is true?
a) Total fixed costs will decrease.
b) Fixed cost per unit will decrease.
c) Total fixed costs will increase.
Dye Company approaches Sam with a special order for 15,000 units at the price of $7.50 per unit. Variable costs will be the same as the present production and accepting special order will not have any impact on rest of the company's orders. Though, Sam is operating at capacity and will gain the extra $50,000 in fixed manufacturing overhead if the order is accepted.
3. What will be the incremental income (loss) associated with accepting special order?
4. What will be the incremental revenue associated with accepting special order?