Answer:
1)Information is missing, so I tried to fill it out with the following:
Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 100,800 units per year is:
- Direct materials $1.60
- Direct labor $4.00
- Variable manufacturing overhead $0.70
- Fixed manufacturing overhead $4.75
- Variable selling & adm. expenses $2.10
- Fixed selling & adm. expenses $3.00
At the current output level, average total costs are $16.15 per unit, and the company is earning $1.85 per unit sold, total profits $186,480 (= $1.85 per unit x 100,800 units).
If the company accepts the special order, the cost of producing and selling each unit will be lower:
- Direct materials $1.60
- Direct labor $4.00
- Variable manufacturing overhead $0.70
- Variable selling & adm. expenses $2.10
Average total costs for the special order should be $8.40 per unit, at a $15 per unit price, the company's income would increase by $19,140 [= ($15 - $8.40) x 2,900 units].
2) If the company wants to sell its remaining inventory from last year, it should only consider variable costs of production, similarly to the special order, since fixed costs were already absorbed by the units sold last year. There COGS should also be $8.40 per unit.