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18 December, 18:42

Stryker Industries received an offer from an exporter for 15,000 units of product at $17.50 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 $20

Unit manufacturing costs:

Variable 11

Fixed 1

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

a. $94,500 loss

b. $97,500 income

c. $37,500 loss

d. $37,500 income

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Answers (1)
  1. 18 December, 18:59
    0
    The correct answer is B.

    Explanation:

    Giving the following information:

    Stryker Industries received an offer from an exporter for 15,000 units of product at $17.50 per unit.

    Unit manufacturing costs:

    Variable 11

    Because it is a special offer that will not affect the domestic sales and assuming there is unused capacity, we will not have into account the fixed costs.

    Effect on income = 15,000*17.5 - 15,000*11 = $97,500
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