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31 July, 00:03

Use this information for Rylan Corporation to answer the question that follow. Rylan Corporation received an offer from an exporter for 25,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:

Domestic unit sales price $22

Unit manufacturing costs:

Variable 11

Fixed 6

What is the amount of the income or loss from acceptance of the offer?

a. $125,000 loss

b. $25,000 loss

c. $25,000 income

d. $125,000 income

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  1. 31 July, 00:09
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    What is the amount of the income or loss from acceptance of the offer?

    b. $25,000 loss

    Explanation:

    If the company has a variable cost of $11 for each unit produced, then the gross margin to cover the fixed cost it's ($16 - $11 = $5), but the company has a fixed cost of $5 for each unit produced, means that the company loss $1 for each unit sold to the exporter.

    The the company has a loss of $1 * 25,000 Units = $25,000
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