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Gypsum Company has offered to purchase 2,000 units of a special edition of the utility bench from Phillips at a price of $12.50 per unit. This special edition will have additional variable costs of $0.35 per unit. Phillips has the capacity to produce this order and it will not affect any of its other operations.

Phillips Manufacturing Corporation produces a single product, a utility bench. Budgeted amounts for the coming year are as follows:

Revenues (20,000 units at $12 each) $240,000
Direct material $40,000
Direct labor 70,000
Variable manufacturing overhead 50,000
Fixed manufacturing overhead 30,000 190,000
Net income $ 50,000

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M949062

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