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It costs Cullumber Company $18 of variable costs and $3 of fixed costs to produce its product. The company currently has unused capacity. The product sells for $25. Homer Industries offers to purchase 4200 units at $20 each. In the deal, Cullumber will incur special shipping costs of $1.50 per unit. If the special offer is accepted and produced with unused capacity, net income will: O increase $8400. O decrease $4200. O decrease $21000. O increase $2100.

It costs Cullumber Company $18 of variable costs and $3 of fixed costs to produce its product. The company currently has unused capacity. The product sells for $25. Homer Industries offers to purchase 4200 units at $20 each. In the deal, Cullumber will incur special shipping costs of $1.50 per unit. If the special offer is accepted and produced with unused capacity, net income will: O increase $8400. O decrease $4200. O decrease $21000. O increase $2100.

FINANCIAL ACCOUNTING
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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It costs Cullumber Company $18 of variable costs and $3 of fixed costs to produce its product. The company currently has unused capacity. The product sells for $25. Homer Industries offers to purchase 4200 units at $20 each. In the deal, Cullumber will incur special shipping costs of $1.50 per unit. If the special offer is accepted and produced with unused capacity, net income will: O increase $8400. O decrease $4200. O decrease $21000. O increase $2100.
Transcribed Image Text:It costs Cullumber Company $18 of variable costs and $3 of fixed costs to produce its product. The company currently has unused capacity. The product sells for $25. Homer Industries offers to purchase 4200 units at $20 each. In the deal, Cullumber will incur special shipping costs of $1.50 per unit. If the special offer is accepted and produced with unused capacity, net income will: O increase $8400. O decrease $4200. O decrease $21000. O increase $2100.
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