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Question 5

CRV Corporation prepared the following budgeted income statement at the beginning of the current year:

Expected sales (80,000 units) $400,000

Operating costs:

Variable costs $220,000

Fixed costs 100,000

(320,000)

Operating income $ 80,000

During the middle of the year, the managers estimated that regular sales would be 70,000 units. Recently, a special order for 10,000 units requested by a foreign company at a price of $4. If the order is accepted, an equipment of $10,000 has to be purchased.

Calculate the relevant costs related to the special order decision?