Question
Corn Company incurs a cost of $35 per unit, of which $20 is variable, to make a product that normally sells for $58. A foreign
Corn Company incurs a cost of $35 per unit, of which $20 is variable, to make a product that normally sells for $58. A foreign wholesale offers to buy 6,000 units at $30 each. Corn will incur additional costs of $3 per unit to imprint a logo and to pay for shipping. Compute the increase or decrease in net income Corn will realize by accepting the special order, assuming Corn has sufficient excess operating capacity. What should Corn Company do?
A) Decline the special order since net loss from the offer is $30,000
B) Accept the special order since net income from the offer is positive by $60,000
C) Accept the special order since net income from the offer is positive by $42,000
C) Decline the special order since the net loss from the special order is $48,000
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