Damato has the practical capacity to produce 15,000 Holiday Panettone (an Italian sweet bread). Based upon practical capacity, the company's average cost = $35.00. Fixed expenses represent 40.0% of the average cost. Currently, Damato sells 13,000 Panettone at a price of $28.00 each. Gustiamo's Italian Bakery requests an order of 5,000 Panettone at a special price = $24.00. The 15.0% sales commission paid on the current sales will be eliminated on the special order. Special packaging will increase direct material costs by $2.00 per Panettone. Gustiamo's is a very large seller of Panettone and Damato would buy a packaging machine for $20,00O. The packaging machine would only be required for Gustiamo's special order. Compute the change in Damato's income due to the special order. O Income wil| INCREASE $1,200 O Income wil| INCREASE $6,000 O Income will DECREASE $15,000 O Income will DECREASE $24,000 O None of the other answers are correct

Damato has the practical capacity to produce 15,000 Holiday Panettone (an Italian sweet bread). Based upon practical capacity, the company's average cost = $35.00. Fixed expenses represent 40.0% of the average cost. Currently, Damato sells 13,000 Panettone at a price of $28.00 each. Gustiamo's Italian Bakery requests an order of 5,000 Panettone at a special price = $24.00. The 15.0% sales commission paid on the current sales will be eliminated on the special order. Special packaging will increase direct material costs by $2.00 per Panettone. Gustiamo's is a very large seller of Panettone and Damato would buy a packaging machine for $20,00O. The packaging machine would only be required for Gustiamo's special order. Compute the change in Damato's income due to the special order. O Income wil| INCREASE $1,200 O Income wil| INCREASE $6,000 O Income will DECREASE $15,000 O Income will DECREASE $24,000 O None of the other answers are correct

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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