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sashaice [31]
3 years ago
9

Special Order Carson Manufacturing, Inc., sells a single product for $43 per unit. At an operating level of 8,000 units, variabl

e costs are $18 per unit and fixed costs $10 per unit. Carson has been offered a price of $27 per unit on a special order of 2,000 units by Big Mart Discount Stores, which would use its own brand name on the item. If Carson accepts the order, material cost will be $2 less per unit than for regular production. However, special stamping equipment costing $14,000 would be ne
Business
1 answer:
Allushta [10]3 years ago
7 0

Answer:

It would be convinient to accept the order as it will increase the operating income by $4,000

Explanation:

<u>Special order unit cost:</u>

sales price                      27

variable cost  <u>   (18 - 2)   16  </u>

contribution                     9

2,000 units x $9 =      18,000 contribution

special equipment   <u>  (14,000)  </u>

net result:                  <em>   4,000</em>

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