A foreign company wants to purchase 2100 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $4000 in order to stamp the foreign company's name on the product. The incremental income (loss) from accepting the order is

Question

Hillary Oconnell

Business

28 June, 02:20

A foreign company wants to purchase 2100 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $4000 in order to stamp the foreign company's name on the product. The incremental income (loss) from accepting the order is

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Answers (1)

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Esperanza Guzman · Answer 1

The missing information in the question is;

The variable manufacturing cost per unit is $22 (including direct material, labor and variable overheads)

Explanation:

Incremental sales 2,100*25 $52,500

Variable manufacturing cost 2100*22 ($46,200)

Stamping Machine for this order ($4,000)

Incremental income from accepting the order $2,300