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Hammer Time produces a limited edition hammer that changes every year. Hammer Time does a one time job of 9,000 hammers. QVC believes that it
Hammer Time produces a limited edition hammer that changes every year. Hammer Time does a one time job of 9,000 hammers. QVC believes that it can sell another 5,000 limited edition hammers and inquires about purchasing them to sell on their network. The information is as follows Sales price = $122/unit Variable cost = $68.32/unit Fixed cost = $300,000 QVC offers Hammer Time Inc, $99/unit to purchase the 5,000 units. Producing the additional 5,000 units would raise fixed cost $25,000 and increase variable cost to $73.27/unit for ALL units produced. Compare Normal 9,000 unit production vs Production with the sale to QVC How much more or less income will Hammer Time make if they take on the QVC job at the special price? (11 total points) $59,100 more $69,500 less $103,650 more $147,900 less
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