Berrian

Berrian Company produces and sells 75 comma 000

75,000 boxes of specialty foods each year. Each box contains the same assortment of food. The company has computed the following annualcosts:

Cost Item

Total Costs

Variable production costs

$

450,000

Fixed production costs

500,000

Variable selling costs

225,000

Fixed selling and administrative costs

160,000

Total costs

$

1,335,000

Berrian

Berrian normally charges $ 22

$22 per box. A new distributor has offered to purchase 7 comma 500

7,500 boxes at a special price of $ 18

$18 per box. Berrian

Berrian will incur additional packaging costs of $ 1

$1 per box to complete the order.

Requirements

(a)

Suppose Berrian

Berrian has surplus capacity to produce 7 comma 500

7,500 more boxes. What will be the effect on Berrian

Berrian's income if it accepts thisorder?

(b)

Suppose that instead of having surplus capacity to produce 7 comma 500

7,500 moreboxes, Berrian

Berrian has surplus capacity to produce only 3 comma 500

3,500 more boxes. What will be the effect on Berrian

Berrian's income if it accepts the new order for 7 comma 500

7,500 boxes?

a) Suppose Berrian

Berrian has surplus capacity to produce 7 comma 500

7,500 more boxes. What will be the effect on Berrian

Berrian's income if it accepts thisorder?

Select the items that are relevant if the order isaccepted, then calculate the effect on income. (Only complete the necessary answer boxes. Use parentheses or a minus sign for a net decrease inincome.)

in income

Requirement(b) Suppose that instead of having surplus capacity to produce 7 comma 500

7,500 moreboxes, Berrian

Berrian has surplus capacity to produce only 3 comma 500

3,500 more boxes. What will be the effect on Berrian

Berrian's income if it accepts the new order for 7 comma 500

7,500 boxes?

Select the items that are relevant if the order isaccepted, then calculate the effect on income. (Only complete the necessary answer boxes. Use parentheses or a minus sign for a net decrease inincome.)

in income