Question

The normal selling price is $21 per unit. The company’s capacity is 75,000 units per year. An order has been received from a mail-order house for 15,000 units at a special price of $14.00 per unit. This order would not affect regular sales or the company’s total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order?

Answer 1

Answer:

Effect on income= $210,000

Explanation:

Giving the following information:

The normal selling price is $21 per unit. The company’s capacity is 75,000 units per year. An order has been received from a mail-order house for 15,000 units at a special price of $14.00 per unit. This order would not affect regular sales or the company’s total fixed costs.

We don't have information regarding the product costs.

Effect on income= 15,000*14= $210,000