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A company received an offer to sell 31,000 units of its product to an exporter for $18 per unit. The normal sales price for this
A company received an offer to sell 31,000 units of its product to an exporter for $18 per unit. The normal sales price for this product is $30 per unit. For this product at the $18 sales price, variable costs will be $12.50 per unit. Fixed costs will not be affected by accepting the offer, but an export tax of 15% of the sales price will be assessed for each unit exported, and shipping costs for the 31,000 units will be $51,150.
Calculate the total effect on net income resulting from acceptance of the offer.
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