ACCT 2101 Midterm: Accounting 2101 Test 3
Document Summary
In sydney company it costs per unit ( variable and fixed) to make a product at full capacity that normally sells for . A foreign wholesaler offers to buy 3,000 units at each. Sydney will incur special shipping costs of per unit. Assuming that sydney has excess operating capacity, indicate the net income (loss) sydney would realize by accepting the special order. Innova company produces golf discs which it normally sells to retailers for each. The cost of manufacturing 20,000 golf discs is: Innova also incurs 5% sales commission (sh. 35) on each disc sold. Mudd corporation offers innova . 75 per disc for 5,000 discs. Mudd would sell the discs under its own brand name in foreign markets not yet served by innova. If innova accepts the offer, its fixed overhead will increase from ,000 to ,000 due to the purchase of a new imprinting machine. No sales commission will result from the special order.
