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help Ace Industries has an annual plant capacity of 70,000 units; current production is 54,000 units per year. At the current production volume, the variable
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Ace Industries has an annual plant capacity of 70,000 units; current production is 54,000 units per year. At the current production volume, the variable cost per unit is $25.00 and the fixed cost per unit is $4.60. The normal selling price of Ace's product is $49.00 per unit. Ace has been asked by Karey Company to fill a special order for 14,000 units of the product at a special sales price of $20.00 per unit. Karey is located in a foreign country where Ace does not currently operate. Karey will market the units in its country under its own brand name, so the special order is not expected to have any effect on Ace's regular sales: Read the requirements. Requirement 1. How would accepting the special order impact Ace's operating income? Should Ace accept the special order? Complete the following incremental analysis to determine the impact on Ace's operating income if it accepts this special order. (Enter a : O" for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin and/or operating income from the special order) Requirements 1. How would accepting the special order impact Ace's operating income? Should Ace accept the special order? 2. How would your analysis change if the special order sales price were to be $44.00 per unit and Ace would have to pay an attorney a fee of $11,000 to make sure it is complying with export laws and regulations relating to the special order Step by Step Solution
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