Explore BrainMass

Explore BrainMass

    Variable and Fixed Costs.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Express Company has the capacity to produce 100,000 juicers per month. They are currently producing and selling 80,000 juicers. The cost of producing 80,000 juicers is $1,200,000 (800,000 variable and $400,000 fixed). The juicers are normally sold directly to retailers at @ $25 each. Express has an offer from Apple Company (foreign wholesaler) to purchase an additional 10,000 juicers at $14 each. Acceptance of this offer would not affect normal sales. If the offer is rejected the vacant factory space could be rented out to produce rent revenue for Express Company of $18,000. If the special order is accepted, by how much would net income increase or decrease?

    © BrainMass Inc. brainmass.com June 3, 2020, 8:30 pm ad1c9bdddf
    https://brainmass.com/business/accounting/variable-fixed-costs-141211

    Solution Preview

    Variable cost of producing juicer = 800,000/80,000=$10 per unit
    Selling price under special order = $14
    The ...

    Solution Summary

    Variable and fixed costs are discussed.

    $2.19

    ADVERTISEMENT