It costs your company SR26 per unit (SR18 variable and SR8 fixed) to produce its product, which normally sells for SR38 per unit. A foreign wholesaler offers to purchase 3,000 units at SR21 each. The company would incur special shipping costs of SR2 per unit if the order were accepted. The company has sufficient unused capacity to produce the 3,000 units. If the special order is accepted, it will decrease the net income (SR3,000).
Opinion |
|
Justification |
|
Incremental analysis
Incremental revenue (3000*21) | 63000 |
Incremental cost | |
Variable cost (3000*18) | 54000 |
Shipping cost (3000*2) | 6000 |
Incremental profit (loss) | 3000 |
No, If company accept special order then profit will increase by $3000
It costs your company SR26 per unit (SR18 variable and SR8 fixed) to produce its product,...
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