Answer:
Effect on income= $2,800 increase
Explanation:
Giving the following information:
Variable manufacturing costs $90,000
Unitary cost= (90,000/8,000)= $11.25
Variable selling and administrative expenses 16,000
Unitary Variable selling and administrative expenses= 16,000/8,000= 2
A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $15.50 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,700 for the purchase of special tools.
Because it is a special offer that will not affect the current sales, we will have into account the incremental fixed costs only.
Effect on income= (2,000*15.5) - 2,000*(11.25+2) - 1,700= $2,800 increase.
