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  3. problem #3 - special order (2 pts.) bronco company

PROBLEM #3 - SPECIAL ORDER (2 pts.) Bronco Company sells Product A for $21 per...

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Accounting

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PROBLEM #3 - SPECIAL ORDER (2 pts.) Bronco Company sells Product A for $21 per unit. If Bronco operates at full production capacity of 200,000 units, its manufacturing cost per unit are as follows: Direct materials $4.00 Direct labor 5.00 Overhead, 2/3 of which is fixed Total $15.00 6.00 A special order for 20,000 units was received from a foreign distributor. The foreign distributor offered $14.50 per unit. The only selling costs on this order would be $3.00 per unit for shipping. Bronco has sufficient capacity to manufacture the additional units. Fixed overhead costs would not be affected if the special order is accepted. Required: (1) Compute the gain or loss if the customer's offer is accepted. (2) Calculate the price per unit at which the special order would generate a $20,000 profit before taxes (hint - incremental costs will stay the same as in part 1)

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