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Smith Manufacturing normally makes widgets that sell for $10.00 per unit and have a total average cost of $9.00 per unit. Johnson receives an order
Smith Manufacturing normally makes widgets that sell for $10.00 per unit and have a total average cost of $9.00 per unit. Johnson receives an order for 1,000 widgets and is offered $8.00 per unit. The avoidable costs of this order (direct materials, direct labor, direct overhead, and sales commissions) associated with this order are $7,500. Determine what the incremental income or loss would be on this order.
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