(Answered) Question - kasten inc budgeted 10000 widgets for production

Accounting

Question - Kasten, Inc. budgeted 10,000 widgets for production during 2010. Kasten has capacity to produce 12,000 units. Fixed factory overhead is allocated to production. The following estimated costs were provided:

Direct material ($7/unit) $ 70,000

Direct labor ($15/hr. × 2 hrs./unit) 300,000

Variable manuf overhead ($3/unit) 30,000

Fixed factory overhead costs ($5/unit) 50,000

Total $450,000

Cost per unit = $45

Kasten received an order for 1,000 units from a new customer in a country in which Kasten has never done business. This customer has offered $43 per widget.

Should Kasten accept the order? How much would profit change if it accepts the offer?

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