Question

At Bargain Electronics, it costs $29 per unit ($20 variable and $9 fixed) to make an MP3 player that normally sells for $44. A foreign wholesaler offers to buy 3,020 units at $24 each. Bargain Electronics will incur special shipping costs of $2 per unit. Assuming that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Revenues		$enter revenues in dollars		$enter revenues in dollars		$enter revenues in dollars
Costs—Variable manufacturing		enter variable manufacturing costs in dollars		enter variable manufacturing costs in dollars		enter variable manufacturing costs in dollars
Shipping		enter shipping costs in dollars		enter shipping costs in dollars		enter shipping costs in dollars
Net income		$enter net income in dollars		$enter net income in dollars		$enter net income in dollars

The special order should be select an option

Answer 1

	Reject Order	Accept Order	Net Income Increase/(Decrease)
Revenues	0	$                                       72,480	$                                       72,480
Variable manufacturing cost	0	$                                       60,400	$                                      -60,400
Shipping Costs	0	$                                         6,040	$                                        -6,040
Net Income	0	$                                         6,040	$                                         6,040
Since there is an increase of $6,040 in net income if order is accepted then the Order should be Accepted