Question 27 Waterways mass-produces a special connector unit that it normally sells for $3.80. It sells approximately 34,700 of these units each year. The variable costs for each unit are $2.30. A company in Canada that has been unable to produce enough of a similar connector to meet customer demand would like to buy 16,400 of these units at $2.60 per unit. The production of these units is near full capacity at Waterways, so to accept the offer from the Canadian company would require temporarily adding another shift to its production line. To do this would increase variable manufacturing costs by $0.30 per unit. However, variable selling costs would be reduced by $0.20 a unit. An irrigation company has asked for a special order of 1,900 of the connectors. To meet this special order, Waterways would not need an additional shift, and the irrigation company is willing to pay $3.10 per unit. v (a) What are the consequences of Waterways agreeing to provide the 16,400 units to the Canadian company? Would this be a wise "special order" to accept? 1,520 Waterways should accept the special order because net income increases v by $ Click if you would like to Show Work for this question: Open Show Work
Question 27 Waterways mass-produces a special connector unit that it normally sells for $3.80. It sells approximately 34,700 of these units each year. The variable costs for each unit are $2.30. A company in Canada that has been unable to produce enough of a similar connector to meet customer demand would like to buy 16,400 of these units at $2.60 per unit. The production of these units is near full capacity at Waterways, so to accept the offer from the Canadian company would require temporarily adding another shift to its production line. To do this would increase variable manufacturing costs by $0.30 per unit. However, variable selling costs would be reduced by $0.20 a unit. An irrigation company has asked for a special order of 1,900 of the connectors. To meet this special order, Waterways would not need an additional shift, and the irrigation company is willing to pay $3.10 per unit. v (a) What are the consequences of Waterways agreeing to provide the 16,400 units to the Canadian company? Would this be a wise "special order" to accept? 1,520 Waterways should accept the special order because net income increases v by $ Click if you would like to Show Work for this question: Open Show Work
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Question 27
Waterways mass-produces a special connector unit that it normally sells for $3.80. It sells approximately 34,700 of these units each year. The variable costs for each unit are $2.30. A company in Canada that has been
unable to produce enough of a similar connector to meet customer demand would like to buy 16,400 of these units at $2.60 per unit. The production of these units is near full capacity at Waterways, so to accept the
offer from the Canadian company would require temporarily adding another shift to its production line. To do this would increase variable manufacturing costs by $0.30 per unit. However, variable selling costs would be
reduced by $0.20 a unit.
An irrigation company has asked for a special order of 1,900 of the connectors. To meet this special order, Waterways would not need an additional shift, and the irrigation company is willing to pay $3.10 per unit.
v (a)
What are the consequences of Waterways agreeing to provide the 16,400 units to the Canadian company? Would this be a wise "special order" to accept?
should
increases
1,520
Waterways
accept the special order because net income
by $
Click if you would like to Show Work for this question: Open Show Work
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