$1.20 variable cost $.90 fixed cost sells for $4.50 A company offers to buy 8,000 units...
Homework Answers
| Amount (in $) Per unit |
Remarks | |
| Fixed Cost per unit | $ 0.90 | Not to be considered for accepting the special offer as it is irrelevant (nature is fixed) |
| Selling price in the special offer | $ 1.40 | |
| Cost Associated with the special offer | ||
| i) Variable cost | $ 1.20 | |
| ii) Extra shipping cost | $ 0.10 | |
| Total Cost | $ 1.30 | |
| Incremental Profit (per unit) if offer is accepted | $ 0.10 | |
| Total number of units | 8000 | |
| Total profit (8000*$ 0.10) | $ 800 | |
| The company should also consider non financial consideration like spare capacity of machines, and idle labour hours before accepting the special offer. | ||
| Please do upvote if you found the answer useful. | ||
| Feel free to reach in the comment section in case of any clarification or queries. |
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$1.20 variable cost
$.90 fixed cost
sells for $4.50
A company offers to buy 8,000 units...
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Ivanhoe has sufficient excess operating capacity.
(Enter negative amounts using either...
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