Answer:
Decrease in profit = $9,000
Explanation:
The impact on the profit would be the sum of the increase in contribution from the special order less the lost contribution by forgoing the standard order.
Accepting the special order of 3,000 units would mean losing standard contribution on 2,000 units from the current sales unit of 15,000. Remember the company only has excess capacity of 1, 000 units i.e (16000-15,000) So, the additional 2,000 units would need to be forgone at standard price.
Variable cost per unit = 315,000/15,000 = $21
Standard selling price = 450,000/15,000 = $30
Special order price = $24
$
Additional contribution from special order = (24-21) × 3,000 = 9,000
Lost contribution from forgoing standard order (30-21) × 2000 =(<u>18,000)</u>
Decrease in profit <u> (9,000)</u>
By accepting the special order, the company would lose $9,000 of its profit
