4. Incremental analysis - accepting a special order Essential Company normally produces and sells 4,000 video monitors for personal computers each month. Variable manufacturing costs amount to $62 per unit, and fixed manufacturing costs are $170,000 per month. The regular sales price of the monitors is $140 per unit. The company is considering a special order from a foreign computer maker to buy an additional 1,000 monitors per month at a special price of $70 per unit. Filling this special order would not affect Essential Company's regular sales volume or fixed manufacturing costs. (a) The average cost per unit at the 4,000-unit-per-month production level is per unit. $ (b) The average cost per unit at the 5,000-unit-per-month production level is per unit. $ (c) The amount of increase or decrease (indicate the correct term) in Essential Company's operating income that would result from accepting the special order is $.
4. Incremental analysis - accepting a special order Essential Company normally produces and sells 4,000 video monitors for personal computers each month. Variable manufacturing costs amount to $62 per unit, and fixed manufacturing costs are $170,000 per month. The regular sales price of the monitors is $140 per unit. The company is considering a special order from a foreign computer maker to buy an additional 1,000 monitors per month at a special price of $70 per unit. Filling this special order would not affect Essential Company's regular sales volume or fixed manufacturing costs. (a) The average cost per unit at the 4,000-unit-per-month production level is per unit. $ (b) The average cost per unit at the 5,000-unit-per-month production level is per unit. $ (c) The amount of increase or decrease (indicate the correct term) in Essential Company's operating income that would result from accepting the special order is $.
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 2PB: Mortech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and...
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![4. Incremental analysis - accepting a special order
Essential Company normally produces and sells 4,000 video monitors for
personal computers each month. Variable manufacturing costs amount to $62
per unit, and fixed manufacturing costs are $170,000 per month. The regular
sales price of the monitors is $140 per unit. The company is considering a special
order from a foreign computer maker to buy an additional 1,000 monitors per
month at a special price of $70 per unit. Filling this special order would not affect
Essential Company's regular sales volume or fixed manufacturing costs.
(a) The average cost per unit at the 4,000-unit-per-month production level is
per unit.
$
(b) The average cost per unit at the 5,000-unit-per-month production level is
per unit.
$
(c) The amount of increase or decrease (indicate the correct term) in Essential
Company's operating income that would result from accepting the special order is
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F09307643-8036-4db3-9a5f-d8dd171d6aaa%2F30f36a39-d07d-48a1-8786-6631c53211fb%2Fppvbt9h_processed.png&w=3840&q=75)
Transcribed Image Text:4. Incremental analysis - accepting a special order
Essential Company normally produces and sells 4,000 video monitors for
personal computers each month. Variable manufacturing costs amount to $62
per unit, and fixed manufacturing costs are $170,000 per month. The regular
sales price of the monitors is $140 per unit. The company is considering a special
order from a foreign computer maker to buy an additional 1,000 monitors per
month at a special price of $70 per unit. Filling this special order would not affect
Essential Company's regular sales volume or fixed manufacturing costs.
(a) The average cost per unit at the 4,000-unit-per-month production level is
per unit.
$
(b) The average cost per unit at the 5,000-unit-per-month production level is
per unit.
$
(c) The amount of increase or decrease (indicate the correct term) in Essential
Company's operating income that would result from accepting the special order is
$
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