Question
Bluebird Mfg. has received a special one-time order for 15,000 bird feeders $3 per unit. Bluebird currently produces and sells 75,000 units at $7.00 each.
Bluebird Mfg. has received a special one-time order for 15,000 bird feeders $3 per unit. Bluebird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. These bird feeders would be marketed under the wholesaler's name and would not affect Bluebird's sales through its normal channels. Production costs for these units are $3.50 per unit, which includes $2.25 variable cost and $1.25 fixed cost. If Bluebird accepts this additional business, the incremental cost will be: A)45,000 B)11,250 C)38,750 D)7,500 E)33,750
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