Exercise D Viking Corporation is operating at 80% of capacity, which means it produces 8,000 units. Variable cost is $100 per un

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Exercise D Viking Corporation is operating at 80% of capacity, which means it produces 8,000 units. Variable cost is $100 per un

it. Wholesaler Y offers to buy 2,000 additional units at $120 per unit. Wholesaler Z proposes to buy 1,500 additional units at $140 per unit. Which offer, if either, should Viking Corporation accept

Business

1 answer:

faust18 [17] · Answer 1 · 2022-04-06T09:14:34+03:00

Answer:

Results are below.

Explanation:

Giving the following information:

The variable cost is $100 per unit.

Wholesaler Y offers to buy 2,000 additional units at $120 per unit.

Wholesaler Z proposes to buy 1,500 additional units at $140 per unit.

We need to choose the best alternative, in this case, the one with the higher increase in income:

Effect on income= total contribution margin

Wholesaler Y:

Effect on income= 2,000*(120 - 100)= $40,000 increase

Wholesaler Z:

Effect on income= 1,500*(140 - 100)= $60,000 increase

The best option is to sell the units to Wholesaler Z. If Wholesaler Y accepts, you can still sell 500 more units.