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1) Special order decision (10 pts) Belize Electricity Limited Industries has an annual plant capacity of 70,000 units; current production is 55,000 units per year.
1) Special order decision (10 pts) Belize Electricity Limited Industries has an annual plant capacity of 70,000 units; current production is 55,000 units per year. At the current production volume, the variable cost per unit is $30.00 and the fixed cost per unit is $4.10. The normal selling price of BEL's product is $45.00 per unit. BEL has been asked by Belco Company to fill a special order for 10,000 units of the product at a special sales price of $25.00 per unit. Belco is located in a foreign country where BEL does not currently operate. Belco will market the units in its country under its own brand name, so the special order is not expected to have any effect on BEL's regular sales. Requirements: 1. How would accepting the special-order impact BEL's operating income? Should BEL accept the special order? (5 pts) 2. How would your analysis change if the special-order sales price were to be $40.00 per unit and BEL would have to pay an attorney a fee of $15,000 to make sure it is complying with export laws and regulations relating to the special order? (5 pts)
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