Answer:
The order for 1,500 at $4 should be rejected. It will imply omre work for no extra income.
Explanation:
First, we need to check for the cost structure of Micro Enterprises
9,000 x $5 average cost = 45,000 total cost
total cost = fixed cost + variable cost
45,000 = 18,000 + 9,000 x variable cost per unit
(45,000 - 18,000) / 9,000 = variable per unit
variable per unit = 3
Now we calculate the the special order
<em>sales revenue for the proposed deal:</em> 1,500 x 4 = 6,000
<em>variable cost for the widget:</em> 1,500 x 3 = (4,500)
<u>opportunity cost:</u>
we resing the contribution for 500 units in the local marke
this units selling price is $6 and their cost is the same $3
500 x (6 - 3 ) = (1,500)
net differencial analysis 0
It should be rejected. as it would not modify the net income
<u></u>
<u>We could prove this by building the incomefor each scenario</u>
<u></u>
<u>if not accepted:</u>
9000 x ( 6 - 3 ) -18,000= 9,000
<u>if accepted:</u>
8500 x (6-3) + 1,500 x (4-3) - 18,000 = 9,000
