Question

Davis, Managerial Accounting. Je Help System Announcements CALCULATOR FRINT O N BACKENDTE Exercise B-5 Bridgeport Manufacturing has an annual capacity of 50,000 units per year. Currently, the company is making and selling 78.200 a year. The normal sales price is $103 per unit, variable costs are $65 per unit, and total fixed expenses are $2,000,000. An out of state distributor has offered to buy 5,300 units at $70 per unit. Bridgeport's cost structure should not changes result of this special order By how much w Bridgeport's income change the company accepts this order? Bridgeport net income will it accept the special order SUBMIT ANSWER

Answer 1

Answers Page: No ④ en recrease (decrease o ne the income colesterol the order In this, the fixed cost is ievielevant as it will be incurred Ashether offer is accepted or not Sales - 5300 units x $ 70 per unit = $ 371000 Variable costa 5300 units X $ 65 per unit = $ 344500 Regular units lost due to acceptance of this offer = 808 00 units – 78200 units = 2600 units Regular Sales affected = 5300 bpils - 2600 units = 2400 units contribution on regular sales = $103 – $65 = 488

Loos of contribution on A Page. No @ regular salos = $38 x 9400 vnits = $102600 Ineveaux (derease) in net incoroe due to this order = 341000 - 344500 - 10.2600 - (4 76100) 1:. Increase | Cdecrease) in net income due to this order = (4 46100) .. Bridgeport net income will decreased by $46100 -35 et accepts the special orders