Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $7 per unit. Minor currently produces and sells 7,500 units at $8.00 each. This level represents 75% of its capacity. Production costs for these units are $7.50 per unit, which includes $5.00 variable cost and $2.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $525 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $775 on the special order, the size of the order would need to be: Multiple Choice O O 214 units. 1,300 units. 650 units. 2,600 units. 350 units.
Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $7 per unit. Minor currently produces and sells 7,500 units at $8.00 each. This level represents 75% of its capacity. Production costs for these units are $7.50 per unit, which includes $5.00 variable cost and $2.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $525 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $775 on the special order, the size of the order would need to be: Multiple Choice O O 214 units. 1,300 units. 650 units. 2,600 units. 350 units.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $7 per unit. Minor currently produces and sells 7,500 units at
$8.00 each. This level represents 75% of its capacity. Production costs for these units are $7.50 per unit, which includes $5.00 variable cost and
$2.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $525 with a zero salvage value. Management
expects no other changes in costs as a result of the additional production. If Minor wishes to earn $775 on the special order, the size of the order
would need to be:
Multiple Choice
214 units.
1,300 units.
650 units.
2,600 units.
350 units.
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