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8 June, 14:35

The normal selling price is $21 per unit. The company's capacity is 75,000 units per year. An order has been received from a mail-order house for 15,000 units at a special price of $14.00 per unit. This order would not affect regular sales or the company's total fixed costs. Required: 1. What is the financial advantage (disadvantage) of accepting the special order?

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  1. 8 June, 17:49
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    Effect on income = $210,000

    Explanation:

    Giving the following information:

    The normal selling price is $21 per unit. The company's capacity is 75,000 units per year. An order has been received from a mail-order house for 15,000 units at a special price of $14.00 per unit. This order would not affect regular sales or the company's total fixed costs.

    We don't have information regarding the product costs.

    Effect on income = 15,000*14 = $210,000
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