Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following information is available for Diva Footwear's segments: Platform Shoes Athletic Shoes Boots Sales $120,000 $420,000 $360,000 Variable costs 64,000 220,000 140,000 Contribution margin

image text in transcribed
The following information is available for Diva Footwear's segments: Platform Shoes Athletic Shoes Boots Sales $120,000 $420,000 $360,000 Variable costs 64,000 220,000 140,000 Contribution margin 56,000 200,000 220,000 Direct fixed costs 45,000 70,000 90,000 Allocated fixed costs 20,000 70,000 60,000 Net income ($ 9,000) $ 60,000 $ 70,000 Diva Footwear normally sells boots for $90 per pair. An exporter has approached Diva about buying 1,000 pairs of boots for a one-time export deal for $85 per pair. Diva can avoid $5.00 per pair of the normal variable cost on this sale, but Diva must pay a fixed cost of $5,000 to have the boots shipped. Diva has the capacity to produce this order, and no regular sales will be affected. What affect will occur on Diva's profits if the order is accepted? Profits will increase by $42,000. Profits will increase by $49,000. Profits will increase by $45,000 Profits will increase by $46,000. Profits will increase by $50,000

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

Step: 3

blur-text-image

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

Advanced Accounting

Authors: Debra C. Jeter, Paul K. Chaney

7th edition

1119373204, 9781119373254 , 978-1119373209

More Books

Students also viewed these Accounting questions

Question

How much control will you have over your daily life?

Answered: 1 week ago