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It costs Crane Company $28 of variable costs and $15 of allocated fixed costs to produce an industrial trash can that sells for $76. A buyer in Mexico offers to purchase 3000 units at $30 each. Crane Company has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income

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facundobuzzetti

Answer:

Effect on income= $6,000 increase

Explanation:

Giving the following information:

Unitary variable cost= $28

Selling price= $30

Number of units= 3,000

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

Effect on income= 3,000*(30 - 28)

Effect on income= $6,000 increase

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