Question

In: Accounting

Pfizer Company produced and sold 50,000 units of product and is operating at 75% of plant...

Pfizer Company produced and sold 50,000 units of product and is operating at 75% of plant capacity. Unit information about its product is as follows:

     Sales Price                                                $70

     Variable manufacturing cost                    $45

     Fixed manufacturing cost ($500,000 ÷ 50,000) 10        55

     Profit per unit                                            $15

The company received a proposal from a foreign company to buy 15,000 units of Pfizer Company's product for $50 per unit. This is a one-time only order and acceptance of this proposal will not affect the company's regular sales. The president of Pfizer Company is reluctant to accept the proposal because he is concerned that the company will lose money on the special order.

Instructions

a) Prepare a schedule reflecting an incremental analysis of this special order.

b) Should Pfizer accept/reject this order? Why?

Solutions

Expert Solution

ekkarill92 answered 6 months ago
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