HASF & Company produces cleaning kits for shotguns. The production capacity available will enable the firm to produce 50,000 kits annually. A projected income statement for next year shows Sales 460,000 Costs of goods sold 296,000 Gross profit 164,000 Selling and administrative expenses 125,000 Net income 39,000 Fixed manufacturing overhead costs 40% of the cost of goods sold. Regular selling price per unit is 10 A 10% sales commission is paid to sales representatives for each kit sold. The purchasing department of a large discount chain has offered to purchase 1500 kits at $6 each. Company sales manager’s initial response is to refuse the offer because he concludes that the $6 price is below the firm’s average cost The sales commission would not be paid on the special order. What will be the impact on net income??
Q#2HASF & Company produces cleaning kits for shotguns. The production capacity available will enable the firm to produce 50,000 kits annually. A
Sales 460,000
Costs of goods sold 296,000
Gross profit 164,000
Selling and administrative expenses 125,000
Net income 39,000
Fixed
What will be the impact on net income??
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