Do It! Review 20-2 Maize Company incurs a cost of $35.86 per unit, of which $20.

Question

Do It! Review 20-2 Maize Company incurs a cost of $35.86 per unit, of which $20.96 is variable to make a product that normally sells for s58. 31 ? reign o esalero ers to uy 6,400 units at $30.80 each. Maize will incur additional costs of $3.70 per unit to imprint a logo and to pay for shipping. Compute the increase or decrease in net income Maize will realize by accepting the special order,assuming Maize has sufficient excess operating capacity. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Reject Accept Revenues Costs Net incomes Should Maize Company accept the special order? Maize company should the special order.

Explanation / Answer

Reject Accept Net Income Increase (Decrease) Revenues             -          197,120                   197,120 Costs:- Variable manufacturing cost             -          134,144                 (134,144) Shipping cost             -            23,680                   (23,680) Net Income             -            39,296                     39,296                                 197,120 (6400*30.8)                                 134,144 (6400*20.96)                                   23,680 (6400*3.7) Maize should accept the Special Order due to increase in Net income

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