Question
Bluebird Manufacturing has received a special one-time order for 15,500 bird feeders at $3.50 per unit. Bluebird currently produces and sells 75,000 units at $7.50
Bluebird Manufacturing has received a special one-time order for 15,500 bird feeders at $3.50 per unit. Bluebird currently produces and sells 75,000 units at $7.50 each. This level represents 80% of its capacity. Production costs for these units are $4.00 per unit, which includes $2.75 of variable costs and $1.75 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 $54,250 increase. $11,625 increase. $42,625 increase. $7,750 decrease. $42,625 decrease.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started