1. Beazer Company manufactures a product with the following full unit costs at a volume of 2,000 units:
Direct labor 195
Manufacturing overhead (25% variable) 400
Selling expenses (40% variable) 240
Administrative expenses (20% variable) 200
Total per unit $1,410
A company recently approached Beazer’s management with an offer to purchase 350 units for $975 each. Beazer currently sells the product to dealers for $1,850 each. Beazer’s capacity is sufficient to produce the extra 350 units. No selling expenses would be incurred on the special order. Should Beazer’s management accept the offer? What will be the net change to profits?
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