Goodstone Tire Corporation sells tires for $90 each. Per-unit costs associated with producing and selling the tires are: Direct materials $35, Direct labor 10, Factory overhead 20. The variable portion of the factory overhead is $8 per unit. A foreign company wants to purchase 1,000 tires for $65 each. Assuming that Goodstone has excess capacity, ______. a. the incremental profit from the special order will be $12,000.b. the incremental loss from the special order will be $25,000.c. there will be no incremental profit or loss from the special order.

As it is shown above no profit by the special order instead the $ 25,000 which he will be getting from the regular sale will also be lost by the special order. Therefore ther will be an incremental loss of $ 25000 from the special order.

anthougo anthougo · Answer 2 · 2022-03-29T14:43:48+02:00

Assuming that the Goodstone Tire Corporation has excess capacity, a. the incremental profit from the special order will be $12,000.

What is incremental profit?

Incremental profit is the difference between incremental revenue and incremental cost.

The incremental cost is the total cost incurred when an additional unit of product is being produced and sold. Incremental revenue is the additional revenue from additional sales.

Data and Calculations:

Selling price per tire = $90

Direct materials $35

Direct labor 10

Factory overhead 20 $65

Variable overhead = $8

Fixed overhead = $12 ($20 - $8)

Total variable cost of production and sales = $53 ($35 + $10 + 8)

Special order's price = $65 per tire

Incremental profit = $12,000 (1,000 x ($65 - $53)

Thus, assuming that the Goodstone Tire Corporation has excess capacity, a. the incremental profit from the special order will be $12,000.

Learn more about incremental profit at https://brainly.com/question/25811981