The Citrus Company produces quality fruit. It has been producing and selling 40,000 boxes per month during the Spring and Summer months. During the Autumn and Winter months it has been noticed that only 30,000 boxes are sold. Citrus Company provides the following information and has asked you to provide advice on the issues raised in each of the following parts: Manufacturing costs Direct material $4.00 per box Direct labor 2.00 per box Variable overhead 0.80 per box Fixed overhead $10,000 Marketing costs Variable $0.50 per unit Fixed $15,000 The Citrus Company has been selling these boxes of fruit for $9.50 each and has asked you to provide answers to the following. Each part is to be considered independently of the others.
Required :
(a) Calculate the monthly profit during a Summer month when all 40,000 boxes produced in a month are sold .
(b) A request has come from overseas to supply 5,000 boxes of fruit per month during the Autumn and Winter months at a price of $7.50 per box .If this request is accepted it would cost an extra $0.40 per box for freight and a one off cost of landing cost of $1000 ..Should this one off request be accepted based on profit alone? What other factors should be considered ? there must be assumption and explanation in the answers
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