Question 15 Not yet answered Marked out of 1 Flag question Gaza company has received a special order to sell additional 2000 units at a selling price of $40, the annual noraml sale is 10000 units at a selling price of $90, the variable cost of goods sold is $35 per unit and variable selling cost is $10 per unit, fixed cost is $300000, the company has excess capacity of 2000 units, acceptance require to pay additional fixed cost of $15000 to lease a special equipment used only for this order, your recommendation for the company is to accept the special offer? a. False. b. True.
Added by Jose N.
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Calculate the total revenue from the special order: Total revenue = Selling price per unit * Number of units Total revenue = $40 * 2000 = $80,000 Show more…
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Kirsty G.
Joseph Company incurs per-unit costs of $11 in variable costs and $4 in fixed costs to produce its main product, which sells for $24. A new customer in the market, Katherine, offers to purchase 2,500 units at $16 each. If the special offer is accepted, the units sold to Katherine would be produced from excess capacity that Joseph has no plans to use. Assuming Joseph Company is adopting a financial perspective, which of the following is true regarding the decision of whether or not to accept Katherine’s special order? Joseph should accept the offer because each unit sold to Katherine increases profits by $5. Joseph should decline the offer because each unit sold to Katherine decreases profits by $8. Joseph should accept the offer because each unit sold to Katherine increases profits by $1. Joseph is indifferent because fixed costs are the same regardless.
Manasvee S.
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