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29 April, 12:44

A business received an offer from an exporter for 10,000 units of product at $13.50 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 $21 Unit manufacturing costs: Variable 12 Fixed 5 What is the amount of the gain or loss from acceptance of the offer

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  1. 29 April, 13:05
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    Effect on income = $15,000 increase

    Explanation:

    Giving the following information:

    A business received an offer from an exporter for 10,000 units for $13.50 per unit.

    Unit manufacturing costs:

    Variable 12

    Because it is a special offer and there is unused capacity, we will not take into account the fixed costs.

    Effect on income = number of units*unitary contribution margin

    Effect on income = 10,000 * (13.5 - 12)

    Effect on income = $15,000 increase
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