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  3. 4-37 alpine luggage has a capacity to produce 400,

4-37 Alpine Luggage has a capacity to produce 400,000 suitcases per year. The company is...

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Accounting

4-37

Alpine Luggage has a capacity to produce 400,000 suitcases per year. The company is currently producing and selling 320,000 units per year at a selling price of $395 per case. The cost of producing and selling one case follows:

Variable manufacturing costs $ 163
Fixed manufacturing costs 41
Variable selling and administrative costs 79
Fixed selling and administrative costs 21
Total costs $ 304

The company has received a special order for 30,000 suitcases at a price of $252 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $48 per suitcase. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations:

Selling price per case $ 252
Variable manufacturing costs 163
Fixed manufacturing costs 41
Variable selling and administrative costs 48
Fixed selling and administrative costs 21
Net profit (loss) per case $ (21 )

Required:

a. What is the impact on profit for the year if Alpine accepts the special order?

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