Falcon Co. produces a single product. Its normal selling price is $28 per unit. The variable costs are $18 per unit. Fixed costs are $21,800 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,400 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n) ◇ a. increase of $4,480 O b. decrease of $3,360 c. increase of $7,280 d. increase of $5,600 ? 13
Falcon Co. produces a single product. Its normal selling price is $28 per unit. The variable costs are $18 per unit. Fixed costs are $21,800 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,400 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n) ◇ a. increase of $4,480 O b. decrease of $3,360 c. increase of $7,280 d. increase of $5,600 ? 13
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6MC: Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling...
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