MC Qu. 61 Bluebird Mfg. has received a special... Bluebird Mfg. has received a s
ID: 2591980 • Letter: M
Question
MC Qu. 61 Bluebird Mfg. has received a special... Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $3.20 per unit. Bluebird currently produces and sells 75,000 units at $720 each. This level represents 80% of its capacity. These bird feeders would be marketed under the wholesaler's name and would not affect Bluebird's sales through its normal channels. Production costs for these units are $3.80 per unit, which includes $2.35 variable cost and $1.45 fixed cost. If Bluebird accepts this additional business, the effect on net income will be Multiple Choice $48,000 increase. $12,750 increase S35.250 increase Prev 47 of 50 Next >Explanation / Answer
Answer is Option (2) $12750 Units Produced at 80% capacity =75000 Units produced at 100% capacity =75000 units /80% =93750 Units Total Units if the Special order accepted =75000+15000 =90000 Units the special order and existing sales bothare in with capacity Incremental Income if the special Order accepted Amount in $ Sale revenur from Special order (15000*$3.20) 48000 Less: variable costs (15000*2.35) 35250 Incremental income 12750 if the special order accepted , the net profit will incresed by $12,750
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