Falcon Co. produces a single product. Its normal selling price is $25 per unit. The variable costs are $18 per unit. Fixed costs are $22,500 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n) a. increase of $4,500 b. decrease of $2,700 C. increase of $5,850 d. increase of $3,600

Falcon Co. produces a single product. Its normal selling price is $25 per unit. The variable costs are $18 per unit. Fixed costs are $22,500 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n) a. increase of $4,500 b. decrease of $2,700 C. increase of $5,850 d. increase of $3,600

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 54P

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