Rumba Dance Hall has offered to buy from Muy Bueno Bakery 100 of their chocolate cakes for $25 each. No variable selling costs would need to be paid, but special packaging of $100 will have to be added. Normally, Muy Bueno sells its cakes at $35 each. Its costs per cake are materials, $12; direct labor, $5; variable factory overhead, $3; fixed factory overhead, $2; and variable selling costs, $4. How much net differential income or loss will Muy Bueno make if it accepts this offer?

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
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Rumba Dance Hall has offered to buy from Muy Bueno Bakery 100 of their chocolate cakes for $25 each. No variable selling costs would need to be paid, but special packaging of $100 will have to be added. Normally, Muy Bueno sells its cakes at $35 each. Its costs per cake are materials, $12; direct labor, $5; variable factory overhead, $3; fixed factory overhead, $2; and variable selling costs, $4. How much net differential income or loss will Muy Bueno make if it accepts this offer?

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