What is the change in operating profits if the 1,000 unit one-time-only special order is accepted for $180 a unit by Welch?

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Welch Manufacturing is approached by a European customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. Welch Manufacturing has excess capacity. The following per unit data apply for sales to regular customers:

Variable costs:

Direct materials $40

Direct labor 20

Manufacturing support 35

Marketing costs 15

Fixed costs:

Manufacturing support 45

Marketing costs 15

Total costs 170

Markup (50%) 85

Targeted selling price $255



What is the change in operating profits if the 1,000 unit one-time-only special order is accepted for $180 a unit by Welch?

a. $70,000 increase in operating profits

b. $10,000 increase in operating profits

c. $10,000 decrease in operating profits

d. $75,000 decrease in operating profits


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