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Calla Company produces skateboards that sell for $62 per unit. The company currently has the...

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Accounting

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Calla Company produces skateboards that sell for $62 per unit. The company currently has the capacity to produce 95,000 skateboards per year, but is selling 80,500 skateboards per year. Annual costs for 80,500 skateboards follow Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses $ 877,450 579,600 942,000 558,000 470,000 $3,427,050 A new retail store has offered to buy 14,500 of its skateboards for $57 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following: . Direct materials and direct labor are 100% variable. 40 percent of overhead is fixed at any production level from 80,500 units to 95,000 units, the remaining 60% of annual overhead costs are variable with respect to volume . selling expenses are 60% variable with respect to number of units sold, and the other 40% of selling expenses are fixed. . There will be an additional $2.70 per unit selling expense for this order. .Administrative expenses would increase by a $860 fixed amount

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