Profit will increase by $30,000 as follows:
Units to manufacture=300,000. Variable Cost (VC) is $750,000. Variable cost per unit
is $750,000/300,000=$2.5. Fixed cost is $450,000. Average fixed per unit=$1.5 Total cost per unit is at $4 (2.5+1.5) making a profit of $1 per baton.
Regular sale of 300,000 batons will generate $300,000 profit,
Total selling price of the special order is reduced by 40%=40%x$5=$3
Because the fixed cost remain constant, the only expense to worry about in this special order is the variable cost of $2.5. Therefore $(3-2.5)=$0.50 profit per order
60,000 x0.5=$30,000 additional increase in profit.
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