Questions
BACC011 Week 11: Practice Quiz
Short answer
Fancy cookies makes decorated cookies. Each cookie sells for $7. To make one cookie costs $1 in direct materials, $2 in direct labour, $0.10 for plastic wrap packaging and fixed kitchen costs of $600. Fancy cookies has received a special order from the local school. They would like to order 282 cookies for $4 for a special mother's day fundraiser. Fancy cookies has enough capacity to accept the special order. If Fancy cookies accepts this special order, how much will the profit increase or decrease by? If accepting the special order will decrease the profit, make sure you include a minus/negative sign before your answer. Round your answer at the end of the calculation to the nearest dollar.
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Step-by-Step Analysis
We need to evaluate the impact on profit if Fancy cookies accepts the special order.
First, identify the relevant financials for the incremental (per-cookie) analysis:
- Special order price per cookie: $4
- Variable costs per cookie: ......Login to view full explanationLog in for full answers
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