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Use the following information for questions #1 and 2: Reggie Corporation manufactures a single product with the following unit costs for 1,000 units: Recently, a
Use the following information for questions \#1 and 2: Reggie Corporation manufactures a single product with the following unit costs for 1,000 units: Recently, a company approached Reggie Corporation about buying 100 units for $5,100 each. The units would be the same, but Reggie would not incur the variable selling expenses. Currently, the models are sold to dealers for $7,800. Reggie Corporation's capacity is sufficient to produce the extra 100 units. No additional fixed expenses would be incurred on the special order. 1. What would be the effect on profits if Reggie accepted the order? a. $270,000 decrease b. $180,000 decrease c. $135,000 decrease d. $66,600 increase e. $111,600 increase f. $120,000 increase g. none of the above 2. Assume that Reggie is operating at capacity. What is the minimum amount they would need from the special order to be no worse off financially if they were to accept the order? a. $7,800 b. $7,350 c. $6,900 d. $6,450 e. $4,434 f. $3,984 g. $3,900 h. none of the above
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