Answer:
Coroid Manufacturers Inc. will increase Operating profit by $102,000 as a result of this unplanned one-time order.
Step-by-step explanation:
Variable costs:
Direct materials$150
Direct labor $90
Manufacturing support $115
Marketing costs $85
Total Variable costs = $440
Fixed costs:
Manufacturing support $165
Marketing costs $55
Total Fixed costs = $220
Total costs $660
Markup (40%) $264
Targeted selling price $924
If Caroid Accepts $540 a unit for a total of 1,020 one-time order.
The attributable costs in a one-time order condition is the Cariable Cost of production.
For this to be 3 factors must be considered:
1. The Plant must be producing exactly similar products as it is producing for its mass Market
2. The Plant must have enough capacity to meet the order with no additional cost to plant investments
3. The Plant Fixed Costs is already deemed incurred irrespective of the one-time order occuring or not
Caroid Manufacturers Inc satisfies all 3 conditions.
Thus, its Expected Operating Profit Per unit from normal operations = $924 - $660 = $264
However, its Eventual Operating Profit based on the above = $540 - $440 = $100
Applied to 1,020 units = $102,000
This is an increase of $102,000 to Caroid's Operating profit because it was not planned for in the first instance.