bid on this special order 10 Zephram Corporation has a pl ca

bid on this special order 10. Zephram Corporation has a pl capacity are: lant capacity of 200,000 units per month. Unit costst Direct materials Direct labor Variable overhead Fixed overhead $4.00 6.00 3.00 1.00 7.00 MarketingOfixed Marketing/distributionDvariable 3.60 ent monthly sales are 190,000 units at S30.00 each. Inc., has contacted Lephram about purchasing 2,000 units at $24.00 each. Current sales would not be affected by the one-time-only special order. What is Zephram\'s change in operating profits if the one-time-only special order is accepted? A) $33,200 increase B) $17,200 increase C) $22,000 increase D) $14,800 increase Corporation

Solution

D) $14,800 increase

Variable cost per unit = $4.00 + $6.00 + $3.00 + $3.60 = $16.60

Change in operating profit = ($24.00 - $16.60) × 2,000 = $14,800 increase