Accustartproduces a hard disk drive that sells for $176per unit. The cost of producing25,000drives in...
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Accounting
Accustartproduces a hard disk drive that sells for $176per unit. The cost of producing25,000drives in the prior year was:
Direct material $725,000
Direct labor 450,000
Variable overhead 225,000
Fixed overhead 1,500,000
Total cost $2,900,000
At the start of the current year, the company received an order for3,080drives from a computer company in China. Management ofAccustarthas mixed feelings about the order. On one hand, they welcome the order because they currently have excess capacity. Also, this is the company's first international order. On the other hand, the company in China is willing to pay only $114per unit.
What will be the effect on profit of accepting the order?(Enter decrease in profit using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Profit will
increase or decrease
by $___________enter a dollar amount
.
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