The Parton Company Has Gathered the Following Information for a Unit

question 2

Essay

The Parton Company has gathered the following information for a unit of its most popular product:
$$\begin{array} { l r } \text { Direct materials } & \$ 20 \\\text { Direct labor } & 15 \\\text { Overhead (60\% variable) } & 20 \\\text { Cost to manufacture } & \$ \mathbf { 5 5 } \\\end{array}$$
The above cost information is based on 10,000 units. Parton currently sells 8,500 units for $62 per unit. A distributor has offered to buy 1,000 units at a price of $50 per unit. This special order would not disturb regular sales.
Required:
a. Calculate Parton's change in operating profits if the special order is accepted.
b. How many units of regular sales could be lost before this contract is not profitable?

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Definitions:

Peter Singer

A philosopher best known for his work in bioethics and his advocacy for animal rights and utilitarianism.

Single Experiment

An investigative method in science where an isolated variable is tested to observe its effects under controlled conditions.

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The systematic investigation into and study of materials and sources in order to establish facts and reach new conclusions about health and disease.