Pink Bunny Corporation manufactures a product with the following full unit costs at a volume of 2,000 units:
Direct materials : $ 100
Direct labor : 40
Manufacturing overhead (30% variable) : 75
Selling expenses (50% variable) : 25
Administrative expenses (10% variable) : 40
Total per unit : $280
A company recently approached Pink Bunny’s management with an offer to purchase 225 units for $275 each. Pink Bunny currently sells the product to dealers for $400 each. Pink Bunny’s capacity is sufficient to produce the extra 225 units. No selling expenses would be incurred on the special order.
If Pink Bunny’s management accepts the offer, profits will: