Question
Abigail & Company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units: Direct Materials $ 4 Direct
Abigail & Company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units:
Direct Materials | $ 4 |
Direct Labor | 10 |
Variable FOH | 8 |
Fixed FOH | 6 |
A foreign company wants to purchase 2,000 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $4,000 in order to stamp the foreign companys name on the product.
If the Abigail & Company has sufficient capacity to produce the additional units, acceptance of the special order would a.increase, b.decrease
net income by a.2,000, b.6,000, c.10,000, d,34,000, e.some amount other than those shown
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