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On April 1 , the federal government offers MCS a contract to supply 2 , 3 6 0 radios to military bases for a June
On April the federal government offers MCS a contract to supply radios to military bases for a June delivery. Because of an unusually large number of rush orders from its regular customers, MCS plans to produce units during the second quarter, which for MCS runs from April through June This level of production will use all available capacity for the quarter. If it accepts the government order, MCS would lose units normally sold to regular customers to a competitor. The government contract would reimburse its share of quarterly manufacturing costs plus pay a $ fixed fee profitNo variable marketing costs would be incurred on the governments units. What impact would accepting the government contract have on second quarter income? Hint: Part of the question is to figure out the meaning of share of quarterly manufacturing costs.Select option "increase" or "decrease", keeping without government contract as the base. Select "none" if there is no effect.
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