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Special Order Decision for the Harley Company

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Brief Exercise 23-3

In Harley Company it costs $28 per unit ($17 variable and $11 fixed) to make a product that normally sells for $50. A foreign wholesaler offers to buy 4,100 units at $28 each. Harley will incur special shipping costs of $2 per unit. Assuming that Harley has excess operating capacity.

Indicate the net income (loss) Harley would realize by accepting the special order. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

Reject Order Accept Order Net Income Increase
(Decrease)

Revenues

Costs—Manufacturing

Shipping

Net income/(loss)

------------------------------------------------------------------------------------------------------------------------------------------------------------

The special order should be accepted or rejected?
.

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Solution Summary

This solution calculates the net income loss in either rejecting or accepting the special order in an excel spreadsheet of the Harley Company.

$2.19
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Harley-Davidson-From Dysfunctional to Cross-Functional. (Pages 212-213).

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During Teerlink's tenure as Harley's Chief Financial Officer, was the
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