Managerial Accounting

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Incremental Profit for Justice Bakery


Justice Bakery sells 550 breads per day at a price of \$1.45.The bakery's capacity is 800 breads. A supermarket in another city offers to buy 300 breads for \$1.25 per bread. Justice Bakery would give up some regular sales to fill the new order.

Costs per unit are:
Ingredients and labor -- \$0.75
Fixed overhead -- \$0.19
Variable overhead -- \$0.34

Determine the incremental profit (in $) if Justice Bakery sells to the supermarket.