The Parton Company Has Gathered the Following Information for a Unit

Essay

The Parton Company has gathered the following information for a unit of its most popular product:
$$\begin{array} { | l | r | } \hline \text { Direct materials } & \$ 20 \\\hline \text { Direct labor } & 15 \\\hline \text { Overhead (60\% variable) } & 20 \\\hline \text { Cost to manufacture } & \$ 55 \\\hline\end{array}$$

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?