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Parker Plumbing has received a special one-time order for 1,400 faucets (units) at $3 per unit. Parker currently produces and sells 5,200 units at $4.0 each. This level represents 75% of its capacity. Production costs for these units are $2.5 per unit, which includes $1 variable cost and $1.5 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Parker wishes to earn $950 on the special order, the size of the order would need to be: A. 1,400 units. B. 475 units. C. 1,950 units. D. 975 units. E. 467 units.

Parker Plumbing has received a special one-time order for 1,400 faucets (units) at $3 per unit. Parker currently produces and sells 5,200 units at $4.0 each. This level represents 75% of its capacity. Production costs for these units are $2.5 per unit, which includes $1 variable cost and $1.5 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Parker wishes to earn $950 on the special order, the size of the order would need to be: A. 1,400 units. B. 475 units. C. 1,950 units. D. 975 units. E. 467 units.

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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Parker Plumbing has received a special one-time order for 1,400 faucets (units) at $3 per unit. Parker currently produces and sells 5,200 units at $4.0 each. This level represents 75% of its capacity. Production costs for these units are $2.5 per unit, which includes $1 variable cost and $1.5 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Parker wishes to earn $950 on the special order, the size of the order would need to be: A. 1,400 units. B. 475 units. C. 1,950 units. D. 975 units. E. 467 units.
Transcribed Image Text:Parker Plumbing has received a special one-time order for 1,400 faucets (units) at $3 per unit. Parker currently produces and sells 5,200 units at $4.0 each. This level represents 75% of its capacity. Production costs for these units are $2.5 per unit, which includes $1 variable cost and $1.5 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Parker wishes to earn $950 on the special order, the size of the order would need to be: A. 1,400 units. B. 475 units. C. 1,950 units. D. 975 units. E. 467 units.
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