Corn Company incurs a cost of $35.71 per unit, of which $20.76 is variable, to m
ID: 2349046 • Letter: C
Question
Corn Company incurs a cost of $35.71 per unit, of which $20.76 is variable, to make a product that normally sells for $57.44. A foreign wholesaler offers to buy 6,000 units at $30.70 each. Corn will incur additional costs of $2.62 per unit to imprint a logo and to pay for shipping. Compute the increase or decrease in net income Corn will realize by accepting the special order, assuming Corn has sufficient excess operating capacity. (If answer is zero, please enter 0. Do not leave any fields blank. If amount decreases the income, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Enter all amounts in columns "Reject" and "Accept" as positive amounts and subtract where necessary.)
Reject
Accept
Increase (Decrease)
$
$
$
Should Corn Company accept the special order? rejectaccept
Net IncomeReject
Accept
Increase (Decrease)
Revenues $ $ $ Costs Net Income$
$
$
Explanation / Answer
Reject
Accept
Net income increase/(decrease)
Revenues
0
184200
184200
Costs
0
140280
-140280
Net income
0
43920
43920
The company should accept the special order.
Under accept column revenues = 6000*30.70, costs = 6000*(20.76 + 2.62). The fixed costs are not relevant.
Reject
Accept
Net income increase/(decrease)
Revenues
0
184200
184200
Costs
0
140280
-140280
Net income
0
43920
43920