Answered: Pederson Enterprises produces giant… | bartleby

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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Question

**Pederson Enterprises Special Order Analysis**

Pederson Enterprises produces giant stuffed bears. Each bear consists of $12 of variable costs and $9 of fixed costs and sells for $45. A wholesaler offers to buy 6,000 units at $14 each, of which Pederson has the capacity to produce. Pederson will incur extra shipping costs of $1 per bear.

- **What is the incremental income or loss that Pederson Enterprises would realize by accepting the special order?**

- **Should Pederson Enterprises accept the special order?**

*Note: Analyze whether the special order will contribute to additional income or result in a loss by comparing the revenues from the order against the variable costs and any additional expenses incurred.*

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