Falcon Co. produces a single product. Its normal selling price is $30 per unit. The variable costs are $19 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1 per unit would be eliminated. If the order is accepted, what would be the impact on net income? a.decrease of $750 b.increase of $3,000 c.increase of $1,500 d.decrease of $4,500
Falcon Co. produces a single product. Its normal selling price is $30 per unit. The variable costs are $19 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1 per unit would be eliminated. If the order is accepted, what would be the impact on net income? a.decrease of $750 b.increase of $3,000 c.increase of $1,500 d.decrease of $4,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Falcon Co. produces a single product. Its normal selling price is $30 per unit. The variable costs are $19 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1 per unit would be eliminated.
If the order is accepted, what would be the impact on net income?
If the order is accepted, what would be the impact on net income?
a.decrease of $750
b.increase of $3,000
c.increase of $1,500
d.decrease of $4,500
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