Black Horse Corporation manufactures a product with the foll…
Black Horse Corporation manufactures a product with the following full unit costs at a volume of 2,000 units: Direct materials $100Direct labor 40Manufacturing overhead (30% variable) 75Selling expenses (50% variable) 25Administrative expenses (10% variable) 40Total per unit $280 A company recently approached Black Horse’s management with an offer to purchase 225 units for $275 each. Black Horse currently sells the product to dealers for $400 each. Black Horse’s capacity is sufficient to produce the extra 225 units. No selling expenses would be incurred on the special order. If Black Horse’s management accepts the offer, profits will: