Question
What is the effect if the company accepts the special order? A company makes soccer balls and shows the costs of production below. Another company
What is the effect if the company accepts the special order?
A company makes soccer balls and shows the costs of production below. Another company that exports all of its products has put forth an offer to purchase soccer balls at $18 each. Production can be spread over 3 months with no interference in other production needs and requiring no overtime.
Monthly capacity | 12,500 soccer balls |
Current monthly sales | 10,000 soccer balls |
Normal Selling Price | $30 per soccer ball |
Manufacturing Costs | |
Variable Costs | $12,50 per soccer ball |
Fixed Costs | $7.50 per soccer ball |
a. The company will generate $27,500 in pre-tax profit.
b. The company will generate $62,000 less in pre-tax profit.
c.The company will generate $90,000 more in pre-tax profit.
d.The company will generate $35,500 less pre-tax profit.
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