Question
Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 13,200 cases of sauce each year but is
Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 13,200 cases of sauce each year but is currently only manufacturing and selling 11,000. The following costs relate to annual operations at 11,000 cases: |
Gwinnett normally sells its sauce for $20 per case. A local school district is interested in purchasing Gwinnett's excess capacity of 2,200 cases of sauce but only if they can get the sauce for $13 per case. This special order would not affect regular sales or total fixed costs or variable costs per unit. If this special order is accepted, Gwinnett's profits for the year will: |
decrease by $4,400
decrease by $22,000
increase by $1,100
decrease by $17,600
Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 13,200 cases of sauce each year but is currently only manufacturing and selling 11,000. The following costs relate to annual operations at 11,000 cases: Total Cost $143,000 Variable manufacturing cost Fixed manufacturing cost $51,000 $22,000 Variable selling and administrative cost $33,000 Fixed selling and administrative cost Gwinnett normally sells its sauce for $20 per case. A local school district is interested in purchasing Gwinnett's excess capacity of 2,200 cases of sauce but only if they can get the sauce for $13 per case. This special order would not affect regular sales or total fixed costs or variable costs per unit. If this special order is accepted, Gwinnett's profits forthe year will: O decrease by $4,40o O decrease by $22,000 O increase by $1,100 O decrease by $17600
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