Question
is a profitable business that produces a single product. The following information is available concerning the product. Per unit Selling price 78 Variable costs (31)
is a profitable business that produces a single product. The following information is available concerning the product.
|
| Per unit |
|
|
|
Selling price |
| 78 |
Variable costs |
| (31) |
Fixed costs |
| (30) |
Profit |
| 17 |
An overseas business has recently offered to buy
8 comma 4008,400
units of the product for
3434
per unit over the next year. Although there is sufficient production capacity to meet the order, a final decision concerning the order has yet to be made.
If the order is not accepted, the spare production capacity will be rented to another business for
5 comma 5005,500
per year.
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