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  3. tommy company makes a product, x-10. it has a prod

Tommy Company makes a product, X-10. It has a production capacity of 10,000 units. The...

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Accounting

Tommy Company makes a product, X-10. It has a production capacity of 10,000 units. The regular selling price is $135 each. Tommy has received a request from Chully for a special order of 1,000 units of X-10. Tommy can satisfy this order without hurting production and sales for the regular customers. Only for this order, no variable selling cost would be incurred. The following is the per-unit cost information:

Direct materials (Variable)

$10

Direct labor (Variable)

$35

Variable overhead

$25

Fixed overhead

$30*

Unit product cost

$100

Variable selling

$6

Fixed selling

$4*

Unit selling cost

$10

Total cost for 1 unit

$110

* based on production and sales of 10,000 units

Chully has suggested a price is $95 per unit. If Tommy accepts this special order, what would be the effect on the companys profit? Indicate the direction (increase or decrease) and amount (by how much).

Use the same information given in #10. Near the end of the year, Tommy has an inventory of X-10. Since a new model X-20 will be marketed next year, the company wants to get rid of leftover X-10 at a discounted price. What is the minimum price Tommy has to charge for leftover X-10?

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