It costs ABC Co. $14 of variable costs and $6 of allocated fixed costs to produce a widget that sells for $30. A buyer in China offers to purchase 1,500 units at $18 each. ABC Co. has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income?

It costs ABC Co. $14 of variable costs and $6 of allocated fixed costs to produce a widget that sells for $30. A buyer in China offers to purchase 1,500 units at $18 each. ABC Co. has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 11P: Emerald Island Company is considering building a manufacturing plant in County Kerry. Predicting...

See similar textbooks

Similar questions

What effect will acceptance of the offer have on net income?
can you please help me figure this out
Need answer
It costs Bonita Industries $28 of variable costs and $13 of allocated fixed costs to produce an industrial trash can that sells for $64. A buyer in Mexico offers to purchase 5000 units at $31 each. Bonita Industries has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income? Select answer from the options below 1. Increase $155000 2. Increase $50000 3. Decrease $50000 4. Increase $15000
It costs Bonita Industries $11 of variable and $5 of fixed costs to produce one scale which normally sells for $43. A foreign wholesaler offers to purchase 4100 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Bonita has sufficient unused capacity to produce the 4100 scales. If the special order is accepted, what will be the effect on net income? O $12300 increase $12300 decrease O $49200 decrease $61500 increase
See picture
Compute the increase or decrease in net income
Suppose that a manufacturer can produce a part for $11.00 with a fixed cost of $7,000. Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $13.00, which includes transportation. a. If the anticipated production volume is 1,300 units, compute the total cost of manufacturing and the total cost of outsourcing. b. What is the best decision? a. The total cost of manufacturing is $.
What is the initial gross margin ?
The company have to cut costs per unit if any?
A buyer from another country offered to purchase 2,000 units of product for $ 2.50 per unit. The normal selling price is $ 3.00 per unit. The company's regular variable costs of $ 1.50 per unit would not change, however overall fixed costs would increase by $ 500 if his order is accepted. How much will net income increase if this special order is accepted? Multiple Choice $ 2,500. $ 2,000. $1,500. $ 3,000. $ 1,850.
What is the initial gross margin of this accounting question?