Homework Answers
Answer :
| Manufacturing Product A | Purchase | |
| Sales | $13.50 | $10.50 |
| Costs : | - | - |
| Avoidable costs | $6.00 | $- |
| Unvoidable cost | $6.00 | $6.00 |
| Cost to purchase | $- | $6.00 |
| Total cost | $12.00 | $12.00 |
| Profit (Sales - Total cost) | $1.50 | $-1.50 |
| The company should | Manufacture product A |
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Maize Company incurs a cost of $34.74 per
unit, of which $19.38 is variable, to make a product that normally
sells for $58.78. A foreign wholesaler offers to buy 5,800 units at
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imprint a logo and to pay for shipping. Compute the increase or
decrease in net income Maize will realize by accepting the special
order, assuming Maize has sufficient excess operating capacity.
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