Variable and Fixed Costs.
Not what you're looking for?
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?
Purchase this Solution
Solution Summary
Variable and fixed costs are discussed.
Solution Preview
Variable cost of producing juicer = 800,000/80,000=$10 per unit
Selling price under special order = $14
The ...
Purchase this Solution
Free BrainMass Quizzes
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.