Question
Hello, Acct 210 question here Bradley Toys produces giant stuffed bears.Each bear consists of $13 of variable costs and $9 of fixed costs and sells
Hello, Acct 210 question here
Bradley Toys produces giant stuffed bears.Each bear consists of $13 of variable costs and $9 of fixed costs and sells for $45.A wholesaler offers to buy 8,500 bears from Bradley at $18 each, of which Bradley has the capacity to produce.If Bradley accepts this special order, Bradley will incur extra shipping costs of $2 per bear.Determine the incremental income or loss that Bradley Toys would realize by accepting the special order.
For this question I am a bit confused on whether I should count the fixed cost into the new bears or drop the fixed cost. If I drop the fixed cost then there is an incremental income of $3 per bear if I keep fixed cost it is a $6 loss per bear any advice on what to look for in more complex problems like this would be greatly appreciated.
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