Question
Bluebird Manufacturing has received a special one-time order for 15,300 bird feeders at $3.30 per unit. Bluebird currently produces and sells 75,000 units at $7.30
Bluebird Manufacturing has received a special one-time order for 15,300 bird feeders at $3.30 per unit. Bluebird currently produces and sells 75,000 units at $7.30 each. This level represents 80% of its capacity. Production costs for these units are $3.80 per unit, which includes $2.55 of variable costs and $1.55 of fixed costs. If the special offer is accepted, there will be no incremental fixed cost. If Bluebird accepts this additional business, the effect on income will be:
Multiple choice
a) $7,650 decrease.
b) $39,015 decrease.
c) $50,490 increase.
d) $39,015 increase.
e) $11,475 increase.
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