Question
Latika Inc. has the following information: Sell price: $6.00/unit Variable cost: $3.50/unit Fixed cost: $17,000 Operating capacity: 18,000 units Full capacity: 30,000 units If they
Latika Inc. has the following information:
- Sell price: $6.00/unit
- Variable cost: $3.50/unit
- Fixed cost: $17,000
- Operating capacity: 18,000 units
- Full capacity: 30,000 units
If they operate above 20,000 unit capacity, their fixed cost will increase by 50%.
Molino Ltd. approached Latika and ordered 7,000 units with the following conditions:
- Molino will receive 25% discount per unit.
- Molino will provide some raw materials & will pay for the shipment. This will result into a $0.25 variable cost savings for Latika.
How much is Latika's profit before accepting the special order?
Question 36 options:
$25,000 | |
$45,000 | |
$30,000 | |
$28,000 |
Question 37 (1 point)
Latika Inc. has the following information:
- Sell price: $6.00/unit
- Variable cost: $3.50/unit
- Fixed cost: $17,000
- Operating capacity: 18,000 units
- Full capacity: 30,000 units
If they operate above 20,000 unit capacity, their fixed cost will increase by 50%.
Molino Ltd. approached Latika and ordered 7,000 units with the following conditions:
- Molino will receive 25% discount per unit.
- Molino will provide some raw materials & will pay for the shipment. This will result into a $0.25 variable cost savings for Latika.
What will happen to Latika's total fixed cost if the order is accepted?
Question 37 options:
Increase by $8,500 | |
Decrease by $8,500 | |
Decrease by $8,750 | |
Increase by $8,750 |
Question 38 (1 point)
Latika Inc. has the following information:
- Sell price: $6.00/unit
- Variable cost: $3.50/unit
- Fixed cost: $17,000
- Operating capacity: 18,000 units
- Full capacity: 30,000 units
If they operate above 20,000 unit capacity, their fixed cost will increase by 50%.
Molino Ltd. approached Latika and ordered 7,000 units with the following conditions:
- Molino will receive 25% discount per unit.
- Molino will provide some raw materials & will pay for the shipment. This will result into a $0.25 variable cost savings for Latika.
Should Latika accept the special order? Why?
Question 38 options:
No, because the profit will decrease by $250.00 | |
Yes, because the profit will increase by $250.00 | |
Yes, because the profit will increase to $31,500 | |
No, because the profit will decrease by $10,500 |
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