XYZ Company incurs costs of $ 30 per unit ($18 variable and $12 fixed) to make a product that normally sells for $42. A foreign wholesaler offers to buy 6,000 units at $26 each. The special order results in additional shipping costs of $1 per unit. Calculate the increase or decrease in net income the company realizes by accepting the special order, assuming they have excess operating capacity. Should the Company accept the special order? Select one: a. XYZ should reject the special offer to avoid 42,000 loss. b. XYZ should accept the offer to gain 24,000 net income. c. XYZ should accept the offer to gain 42,000 net income. d. XYZ should reject the special offer to avoid 24,000 loss.
XYZ Company incurs costs of $ 30 per unit ($18 variable and $12 fixed) to make a product that normally sells for $42. A foreign wholesaler offers to buy 6,000 units at $26 each. The special order results in additional shipping costs of $1 per unit. Calculate the increase or decrease in net income the company realizes by accepting the special order, assuming they have excess operating capacity. Should the Company accept the special order? Select one: a. XYZ should reject the special offer to avoid 42,000 loss. b. XYZ should accept the offer to gain 24,000 net income. c. XYZ should accept the offer to gain 42,000 net income. d. XYZ should reject the special offer to avoid 24,000 loss.
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 3PB: Cinnamon Depot bakes and sells cinnamon rolls for $1.75 each. The cost of producing 500,000 rolls in...
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XYZ Company incurs costs of $ 30 per unit ($18 variable and $12 fixed) to make a product that normally sells for $42. A foreign wholesaler offers to buy 6,000 units at $26 each. The special order results in additional shipping costs of $1 per unit. Calculate the increase or decrease in net income the company realizes by accepting the special order, assuming they have excess operating capacity. Should the Company accept the special order?
Select one:
a. XYZ should reject the special offer to avoid 42,000 loss.
b. XYZ should accept the offer to gain 24,000 net income.
c. XYZ should accept the offer to gain 42,000 net income.
d. XYZ should reject the special offer to avoid 24,000 loss.
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