Rylan Corporation received an offer from an exporter for 25,000
units of product at $16 per unit. The acceptance of the offer will
not affect normal production or domestic sales prices. The
following data are available:
Domestic unit sales price | $22 |
Unit manufacturing costs: | |
Variable | 11 |
Fixed | 6 |
What is the amount of the income or loss from acceptance of the
offer?
a.$25,000 income
b.$125,000 loss
c.$125,000 income
d.$25,000 loss
If the acceptance of the offer will not affect normal production or domestic sales prices then Rylan Corporation should accept affer only if it is able to cover its variable cost. Selling price above variable cost will be all profit of the Rylan Corporation.
Hence, profit will be - 25000*(16-11)
25000*5 = 125000 income
3rd option is correct
Rylan Corporation received an offer from an exporter for 25,000 units of product at $16 per...
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