It costs Concord Corporation $28 of variable costs and $16 of allocated fixed costs to produce...

It costs Concord Corporation $28 of variable costs and $16 of allocated fixed costs to produce an industrial trash can that sells for $82. A buyer in Mexico offers to purchase 3000 units at $33 each. Concord Corporation has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income?

Expert Solution

Solution :

If concord corporation accept the offer there will be an increase in income :

Incremental Income = Incremental Revenue - Incremental Costs

= (3,000 * $ 33) + (3,000 * $ 28)

= $ 99,000 - 84,000

= $ 15,000

If concord corporation accept the offer, income will increase by $ 15,000.

Note : Allocated OH are fixed in nature and not directly incurred by product and therefore are irrelevant for decision making.

Please vote up and write your doubts in comment section. Would be glad to help you further.

ekkarill92 answered 2 years ago

The Warren Watch Company sells watches for $28, fixed costs are $195,000, and variable costs are...

The Warren Watch Company sells watches for $28, fixed costs are $195,000, and variable costs are $15 per watch. What is the firm's gain or loss at sales of 9,000 watches? Loss, if any, should be indicated by a minus sign. Round your answer to the nearest cent. $ What is the firm's gain or loss at sales of 18,000 watches? Loss, if any, should be indicated by a minus sign. Round your answer to the nearest cent. $ What...

The Warren Watch Company sells watches for $28, fixed costs are $155,000, and variable costs are...

The Warren Watch Company sells watches for $28, fixed costs are $155,000, and variable costs are $12 per watch. What is the firm's gain or loss at sales of 6,000 watches? Loss, if any, should be indicated by a minus sign. Round your answer to the nearest cent. $ What is the firm's gain or loss at sales of 16,000 watches? Loss, if any, should be indicated by a minus sign. Round your answer to the nearest cent. $ What...

What is the difference between fixed costs and variable costs?’ Are there fixed costs in the...

What is the difference between fixed costs and variable costs?’ Are there fixed costs in the long run? Explain briefly. Are fixed costs also sunk costs? Explain. What are diminishing marginal returns as they relate to costs? Which costs are measured on a per-unit basis: fixed costs, average cost, the average variable cost, variable costs, and marginal cost? How is each of the following calculated: marginal cost, average total cost, average variable cost? What shapes would you generally expect each...

Variable, Fixed, and Mixed Costs Classify the following costs of activity inputs as variable, fixed, or...

Variable, Fixed, and Mixed Costs Classify the following costs of activity inputs as variable, fixed, or mixed. Identify the activity and the associated activity driver that allow you to define the cost behavior. For example, assume that the resource input is “cloth in a shirt." The activity would be "sewing shirts," the cost behavior "variable," and the activity driver "units produced." Prepare your answers in the following format: Activity Cost Behavior Activity Driver a. Flu vaccine Assembling Delivering orders Filing...

Tech Com's. predicted 2017 variable and fixed costs are as follows: Variable costs Fixed costs Manufacturing...

Tech Com's. predicted 2017 variable and fixed costs are as follows: Variable costs Fixed costs Manufacturing 480,000 315900 Selling and Administrative 216,000 60500 Total 696,000 376,400 Tech com. produces a wide variety of computer interface devices. Per unit manufacturing cost information about one of these products, a high-capacity flash drive is as follows: Direct material $10 Direct labor 9 Variable Manufacturing Overhead 7 Fixed Manufacturing Overhead 9 Total manufacturing costs $35 The following is the variable selling and administrative costs...

A project currently generates sales of $16 million, variable costs equal 50% of sales, and fixed...

A project currently generates sales of $16 million, variable costs equal 50% of sales, and fixed costs are $3.2 million. The firm’s tax rate is 40%. Assume all sales and expenses are cash items. a. What are the effects on cash flow, if sales increase from $16 million to $17.6 million? (Input the amount as positive value. Enter your answer in dollars not in millions.) Cash Flow____ by____ b. What are the effects on cash flow, if variable costs increase...

HASF Corporation has fixed costs of 1,000,000 variable costs of50 per units and a contribution...

HASF Corporation has fixed costs of 1,000,000 variable costs of 50 per units and a contribution margin ratio of 40% and no of units sold 20,000 Required: Compute the following Units sales price and unit’s contribution margin for the above...

At a sales level of 10,000 units, Darly Corporation has variable costs of $40,000, fixed costs...

At a sales level of 10,000 units, Darly Corporation has variable costs of $40,000, fixed costs of $48,000, and sales of $80,000. Calculate the sales level that would put the company at its break-even point. A - What is the selling price per unit? $ B - What is the variable cost per unit? $ C - What is the unit contribution margin? $ D - What is the break-even point in units? E - What is the break-even point...

Swifty Corporation incurred the following costs for 76000 units: Variable costs $456000 Fixed costs 392000 Swifty...

Swifty Corporation incurred the following costs for 76000 units: Variable costs $456000 Fixed costs 392000 Swifty has received a special order from a foreign company for 2000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $1600 for shipping. If Swifty wants to break even on the order, what should the unit sales price be? $11.16 $6.80 $11.96 $6.00

New Berlin Corporation has annual fixed costs of $800,000, variable costs of $48 per unit, and...

New Berlin Corporation has annual fixed costs of $800,000, variable costs of $48 per unit, and a contribution margin ratio of 40 percent. a. Compute the unit sales price and unit contribution margin for the above product. b. Compute the sales volume in units required for New Berlin Corporation to earn an operating income of $600,000. c. Compute the dollar sales volume required for New Berlin Corporation to earn an operating income of $600,000.

Question