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Question: The Young Company has gathered the following information for a unit of its most popular product:


Direct materials	$	12
Direct labor		6
Overhead (40% variable)		20
Cost to manufacture		38
Desired markup (50%)		19
Target selling price	$	57

The above cost information is based on 11,400 units. A distributor has offered to buy 3,100 units at a price of $39 per unit. The distributor claims this special order would not disturb regular sales at $57. Special packaging and other selling expenses would be an additional $0.50 per unit for the special order. How many units of regular sales could be lost before this contract is not profitable?

A) 1,250 units.

B) 3,100 units.

C) 0 units.

D) 1,550 units.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92572236

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