Study& Practice pen Assignment Start Time: 04:32 PM/ Remaining: 39 min CALCILATO

Question

Study& Practice pen Assignment Start Time: 04:32 PM/ Remaining: 39 min CALCILATOR FULL SCREEN PRINTER VERSION 4 BACK NEXT Multiple Choice Question 161 It costs Dryer Company $26 per unit ($18 variable and $8 fixed) to produce its product, which normally sells for $38 per unit. A foreign wholesaler offers to purchase 5000 units at $21 each. Dryer would incur special shipping costs of $2 per unit if the order were accepted. Dryer has sufficient unused capacity to produce the 5000 units. If the special order is accepted, what will be the effect on net income? 5,6,7 O $15000 increase O $5000 decrease 0 $5000 increase O $90000 increase Question Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER

Explanation / Answer

Calculate effect on net income :

so answer is c) $5000 increase

Incremental revenue (5000*21) 105000 Less; Incremental cost variable cost (5000*18) (90000) Shipping cost (5000*2) (10000) Incremental profit 5000

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