Question

Able Company’s unit manufacturing cost is:Variable Costs $50Fixed Costs 25A special order for 1,000 units has been received from a foreign company. The unit price requested is $55. The normal unit price is $80. If the order is accepted, unit variable costs will increase by $2 for additional freight costs. If the order is accepted, incremental profit (loss) will be which of the following? (Points : 4)a) $(23,000)b)$3,000c)$(20,000)d)$5,000

Answer 1

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Unitary cost:

Variable Costs= $50

Fixed Costs= $25

A special order for 1,000 units has been received from a foreign company. The unit price requested is $55.

If the order is accepted, unit variable costs will increase by $2 for additional freight costs.

Because it is a special offer, we will not take into account the fixed costs.

Unitary cost= 50 + 2= $52

Effect on income= 1,000*(55 - 52)= $3,000 increase