Mitchell Company manufactures a product with a unit variable cost of $50 and a unit sales price of $100. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $80 each in a foreign market which would not affect its fixed costs and present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows: O Income would decrease by $10,000. Income would decrease by $20,000. Income would increase by $80,000. Income would increase by $30,000

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Mitchell Company manufactures a product with a unit variable cost of $50 and a unit sales price of
$100. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The
company has a one-time opportunity to sell an additional 1,000 units at $80 each in a foreign
market which would not affect its fixed costs and present sales. If the company has sufficient
capacity to produce the additional units, acceptance of the special order would affect net income
as follows:
Income would decrease by $10,000.
Income would decrease by $20,000.
Income would increase by $80,000.
Income would increase by $30,000
Transcribed Image Text:Mitchell Company manufactures a product with a unit variable cost of $50 and a unit sales price of $100. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $80 each in a foreign market which would not affect its fixed costs and present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows: Income would decrease by $10,000. Income would decrease by $20,000. Income would increase by $80,000. Income would increase by $30,000
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