Question

It costs Lannon Fields $28 of variable costs and $12 of allocated fixed costs to produce...

It costs Lannon Fields $28 of variable costs and $12 of allocated fixed costs to
produce an industrial trash can that sells for $60. A buyer in Mexico offers to purchase
3,000 units at $36 each. Lannon Fields has excess capacity and can handle the
additional production. What effect will acceptance of the offer have on net income?
a. Decrease $12,000
b. Increase $12,000
c. Increase $108,000
d. Increase $24,000

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Answer #1

Effect on net income due to acceptence of offer :- Particulars Amount $ 1,08,000 (84,000) Sales Revenue from the order (3000*

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