The cost of goods sold includes $1,200,000 of fixed manufacturing overhead; the operating expenses include $100,000 of fixed mar
keting expenses. A special order offering to buy 50,000 units for $7.50 per unit has been made to Tram. Fortunately, there will be no additional operating expenses associated with the order and Tram has sufficient capacity to handle the order. How much will operate profits be increased if Tram accepts the special order
1 answer:
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- Remuneration
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1. Ordering 204 boxes will minimize the sum of annual ordering and carrying costs
2. Total cost will be $6118.82
3. Yes,annual ordering and carrying costs always equal at the EOQ.
<u>Explanation</u>:
D = 40 boxes per for 260 days
= boxes
S = $60
H = $30
1.
= 203.96
Q = 204 boxes
2.
TC= $6118.82