Question

Maize Company incurs a cost of $34 per unit, of which $21 is variable, to make a product that normally sells for $59. A foreign wholesaler offers to buy 6,600 units at $30 each. Maize will incur additional costs of $1 per unit to imprint a logo and to pay for shipping. Compute the increase or decrease in net income Maize will realize by accepting the special order, assuming Maize has sufficient excess operating capacity. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Reject Accept Net Income Increase (Decrease) Revenues $ $ $ Costs Net income $ $ $ g

Answer 1

Answer:

$52,800

Explanation:

The computation of the increase or decrease in net income is shown below:

Particulars         Reject            Accept        net income or decrease

Revenue

(6,000 × $30)                          $198,000    $198,000

Less:

Cost

($6,600 × ($21 + $1)              $145,200     -$145,200

Net                                        $52,800       $52,800

Since the amount comes in positive so the spcial order should be accepted