Blue Technologies manufactures and sells DVD players. Great Products Company has
ID: 2463820 • Letter: B
Question
Blue Technologies manufactures and sells DVD players. Great Products Company has offered Blue Technologies $22 per DVD player for 10,000 DVD players. Blue Technologies' normal selling price is $30 per DVD player. The total manufacturing cost per DVD player is $18 and consists of variable costs of $14 per DVD player and fixed overhead costs of $4 per DVD player. (NOTE: Assume excess capacity and no effect on regular sales.) How much are the expected increase (decrease) in revenues and expenses from the special sales order?
How much are the expected increase (decrease) in revenues and expenses from the special sales order?
Select one:
a. Expected increase in revenues $220,000; expected increase in expenses $140,000
b. Expected increase in revenues $220,000; expected increase in expenses $40,000
c. Expected increase in revenues $300,000; expected increase in expenses $140,000
d. Expected increase in revenues $220,000; expected increase in expenses $120,000
Explanation / Answer
Expected increase in revenues = 10000*22=$2,20,000
Expected increase in expenses = 10000*14= $1,40,000
Answer: Option a