Rylan Corporation received an offer from an exporter for 25,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $22 Unit manufacturing costs: Variable 11 Fixed 6 What is the amount of the income or loss from acceptance of the offer? a. $125,000 loss b. $125,000 income c. $25,000 loss d. $25,000 income

Rylan Corporation received an offer from an exporter for 25,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $22 Unit manufacturing costs: Variable 11 Fixed 6 What is the amount of the income or loss from acceptance of the offer? a. $125,000 loss b. $125,000 income c. $25,000 loss d. $25,000 income

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 5 ABC Ltd sells a product that has a price of GH¢8.00 per unit, variable manufacturing cost of GH 4.00 per unit. ABC Company has a fixed manufacturing cost of GH¢150,000 and fixed general, selling and administrative expenses of GH¢50,000. You are required to answer the following questions as the management accountant of ABC Ltd. a. How many units does ABC Company have to sell to breakeven? b. How many units does ABC Company have to sell to earn an operating income of GH$200,000? c. d. What sales revenue must ABC Company achieve to breakeven? e. What sales revenue must ABC Company achieve to earn an operating income of GH$200,000? Suppose ABC expects to sell 300,000 units, what is the margin of safety? How do you explain your result?
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