Answer:
Option (C) is correct.
Explanation:
Variable costs = $28
Allocated fixed costs = $17
Selling price = $84
Due to acceptance of M offer, S would be got excess contribution margin per unit. Because acceptance selling price ($34) is greater than the variable cost per unit ($28).
We don't have any information about the fixed cost due to acceptance. Therefore, we assumed that fixed cost is not increased.
Increased contribution margin per unit:
= Selling price - Variable cost
= $34 - $28
= $6
For 3,000 units, Increased contribution margin = 3,000 × $6
= $18,000
Therefore, net income is increased by $18,000 when the offer is accepted.
When resources are low, businesses know that they can increase their prices because people need them desperately.
<span> Recording the accrual of salaries incurred.</span>
Presto will record the acquisition cost of the equipment as $22,250 (21,500+430+320) which is the total cost for making the fixed asset ready for operation. The Generally accepted accounting principle requires a company to record all of the acquisition cost of a fixed asset. Thus, Presto company must capitalize all cost related to the fixed asset.
