Question

Maize Company incurs a cost of $35.97 per unit, of which 19.77 is variable, to make a product that normally sells for $57.72. A foreign wholesaler offers to buy 5, 100 units at $30.69 each. Maize will incur additional costs of $2.66 per unit to 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. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Reject Accept Revenues Costs Net income $ Should Maize Company accept the special order? aize company should the special order.

Answer 1

To make decision regarding accept or reject the project , some costs are not considered

• Sunk cost - which is already incurred(Past cost)
• Fixed cost - cost which will incur whether accept or reject project
• Committed cost - cost which is committed to be paid in future

SlooK30 69 156519 cost Sloo(I9:+2.664393) 0120 C Should accabt the nmメ oxea (23-91-9 ,77) = 16-2 Fixed cost of $16.2 per unư ad nosmally emmsioler whiletaking olecision