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masya89 [10]
3 years ago
8

Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Bluebird currently produces and sell

s 75,000 units at $7.00 each. This level represents 80% of its capacity. Production costs for these units are $3.50 per unit, which includes $2.25 variable cost and $1.25 fixed cost. If Bluebird accepts this additional business, the effect on net income will be:
A. $45,000 increase.

B. $11,250 increase.

C. $33,750 increase.

D. $7,500 decrease.

E. $33,750 decrease
Business
1 answer:
UkoKoshka [18]3 years ago
8 0

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Special one-time order for 15,000 bird feeders at $3 per unit.

Variable cost= $2.25

<u>Because it is a special offer and there is unused capacity, we will not have into account the fixed costs.</u>

Effect on income= 15,000*(3 - 2.25)= $11,250 increase.

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