Question
Falcon Co. produces a single product. Its normal selling price is $29 per unit. The variable costs are $16 per unit. Fixed costs are $21,200
Falcon Co. produces a single product. Its normal selling price is $29 per unit. The variable costs are $16 per unit. Fixed costs are $21,200 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,370 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated.
If the order is accepted, what would be the impact on profit?
a.decrease of $4,932
b.increase of $6,576
c.increase of $10,686
d.increase of $8,220
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