Byways Production has an annual capacity of 80,000 units per year. Currently, the company is making and
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Byways Production has an annual capacity of 80,000 units per year. Currently, the company is making and selling 78,000 units a year. The normal sales price is $100 per unit; variable costs are $65 per unit, and total fixed expenses are $2,000,000. An out-of-state distributor has offered to buy 5,000 units at $75 per unit.
Byways' cost structure should not change as a result of this special order.
Required
By how much will Byways' income change if the company accepts this order?
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Since Byways only has capacity to produce 2000 units it will have to give up 30...View the full answer
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