The Parton Company has gathered the following information for a unit of its most popular product: Direct materials $ 20 Direct labor 15 Overhead (60% variable) 20 Cost to manufacture $ 55 The above cost information is based on 10,000 units. Parton currently sells 8,500 units for $62 per unit. A distributor has offered to buy 1,000 units at a price of $50 per unit. This special order would not disturb regular sales. Required: a. Calculate Parton's change in operating profits if the special order is accepted. b. How many units of regular sales could be lost before this contract is not profitable?
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