Speical Order Soni, LTD produces wall mounts for flat panel television sets. The forecasted income statement for 2017 is as follows:
SONI, LTD
Budgeted Income Statement
For the Year 2017
Sales ($44 per unit) $ 4,400,000
Cost of good sold ($ 36 per unit) (3,600,000)
Gross profit 800,000
Selling expenses ($3 per unit) (300,000)
Net income $500,000
Additional Information
(1) Of the production costs and selling expenses, $800,000 and $100,000, respectively, are fixed.
(2) Soni, LTD received a special order from a hospital supply company offering to buy 12,500 wall mounts for $30. If it accepts the order, there will be no additional selling expenses, and there is currently sufficient excess capacity to fill the order. The company's sales manager argues for rejecting the order because "we are not in the business of paying $36 to make a product to sell for $30.
Required:
1. Calculate the current production volume.
2. The variable production cost are $ ___________.
