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Special order_ Accept or Reject




Question;There are a number of individual decisions covered in this week's;material. One is incremental analysis. The problem below is an;example of this. The only things that are different in the various;scenarios are sales dollars and variable costs. Since fixed costs are;fixed, they have no impact on the decision. So, as long as the additional;units can be sold at a price higher than the variable cost, the order will;increase net income.;Your company produces 10,000 units which is 80% of capacity and its;normal;selling price is $25/unit.;The following cost data are provided at 10,000 units;Variable cost per unit;$16;Fixed cost per unit;4;a) Should you accept a special order from a foreign company for an;additional;2,000 units at a special price of $22/unit?;b) Should you accept the order at19/unit?;c) Should you accept the order at $15/unit?


Paper#44654 | Written in 18-Jul-2015

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