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Waterways mass-produces a special connector unit that it normally sells for $3.90. It sells approximately 35,000 of these units each year. The variable costs for
Waterways mass-produces a special connector unit that it normally sells for $3.90. It sells approximately 35,000 of these units each year. The variable costs for each unit are $2.30. Acompany in Canada that has been unable to produce cnough of a similar conncctor to mect customer dcmand would likc to buy 15,000 of thesc units at $2.60 per unit. The production of thesc units is ncar full capacity at Watcrways, so to acccpt the offer from the Canadian company would requirc temporarily adding another shift to its production linc. To do this would increasc variable manufacturing costs by $0.30 per unit. However. variable sclling costs would be reduced by $0.20 a unit. An irrigation company has asked for a special order of 2.000 of the connectors. To meet this special order Waterways would not need an additional shift, and the irrigation company is willing to pay $3.10 per unit. Your answcr is partially correct. What are the conscquenccs of Waterways agrccing to provide the 15,000 units to the Canadian company? Would this be a wisc 'spccial order" to accept? Waterways should ccept the special order because net income increases by $ Your answer is correct. Should Waterways accept the special order from the irrigation company? waterways l should | accept the special order because net income by $ 1600 increases -Your answcr is partially correct. What would be the consequernces of accepting both special orders? Accepting hoth special orders wouldincreasenet income by $ 1600
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