Question : Rainbowbird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Rainbowbird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. Production costs for these units are $3.50 per unit, which includes a $2.25 variable cost and $1.25 fixed cost. If Rainbowbird accepts this additional business, the effect on net income will be?
Question : Rainbowbird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Rainbowbird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. Production costs for these units are $3.50 per unit, which includes a $2.25 variable cost and $1.25 fixed cost. If Rainbowbird accepts this additional business, the effect on net income will be?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2CE
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Question : Rainbowbird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Rainbowbird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. Production costs for these units are $3.50 per unit, which includes a $2.25 variable cost and $1.25 fixed cost. If Rainbowbird accepts this additional business, the effect on net income will be?
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