Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The answer is A, please provide an explanation to the answer. 6. Centex Tables Inc. is considering an offer of $50.00 per table on an

The answer is A, please provide an explanation to the answer.

6. Centex Tables Inc. is considering an offer of $50.00 per table on an order of 100 tables from the South Texas Fried Chicken chain of restaurants. The normal selling price is $75 per table. At this point Centex, who has production capabilities up to 12,000 units, has produced 10,000 tables, with fixed costs of $200,000 and variable manufacturing costs of 350,000. Fixed manufacturing cost, fixed selling and administrative costs and variable selling and administrative costs would not change if the order is accepted. Making the sale would not affect future sales activity. Should the offer be accepted and why?

a.***Yes, because the additional revenue would exceed the increase in costs

b. No, because the additional revenue would be less than the increase in costs

c. Yes, because there would be additional revenue but no change in costs

d. No, because fixed costs would increase

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Integrated Accounting For Windows

Authors: Dale A. Klooster, Warren Allen

6th Edition

0324664850, 9780324664850

More Books

Students also viewed these Accounting questions