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Colortrigon Company makes a variety of paper products. One product is 30 lb copier paper, packaged 3,000 sheets to a box. One box normally sells
Colortrigon Company makes a variety of paper products. One product is 30 lb copier paper, packaged 3,000 sheets to a box. One box normally sells for $20. A large bank offered to purchase 6,000 boxes at $15 per box. Costs per box are as follows:
Direct materials | $6 |
Direct labor | 2 |
Variable overhead | 2 |
Fixed overhead | 3 |
No variable marketing costs would be incurred on the order. The company is operating significantly below the maximum productive capacity. No fixed costs are avoidable. If Colotrigon accepts the order how much will its income increase or decrease by?
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