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In the Whine Company, it costs $30 per unit ($20 variable and $10 fixed) to make a product that normally sells for $55. A foreign
In the Whine Company, it costs $30 per unit ($20 variable and $10 fixed) to make a product that normally sells for $55. A foreign wholesaler offers to buy 3000 units at $35 each. The Whine Company will incur special shipping costs of $2 per unit.
Required:
- Assuming that the Whine Company has excess operating capacity, What is the impact on profit for the year if Whine Company accepts the special order? Show computations.. (8 marks)
- Do you agree with the decision to reject the special order? Explain. (7 marks)
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