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QUESTION: Current sales are 40,000 units at $40 per unit. Production capacity is 60,000 units; Variable costs are $12 per unit; Fixed costs are $350,000.
QUESTION: Current sales are 40,000 units at $40 per unit. Production capacity is 60,000 units; Variable costs are $12 per unit; Fixed costs are $350,000. A special order for 1,200 units at a reduced sales price of $30/ unit has been received. The special order will require the purchase of new equipment for $25,000 which will be disposed of after the special order has been filled. 1. Should the order be accepted? 2. What if the new equipment has a disposal value of $4,000
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