The company has received a special order for 5,000 suitcases at a price of $100...
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Accounting
The company has received a special order for 5,000 suitcases at a price of $100 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 $20 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 | $ | 100 | |
| Variable manufacturing costs | 64 | ||
| Fixed manufacturing costs | 16 | ||
| Variable selling and administrative costs | 20 | ||
| Fixed selling and administrative costs | 8 | ||
| Net profit (loss) per case | $ | (8 | ) |
Required:
a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.)
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