York Corporation has been producing and selling 42,000 hats a year. The York Cor

ID: 2464862 • Letter: Y

Question

York Corporation has been producing and selling 42,000 hats a year. The York Corporation has the capacity to produce 52,000 hats with its present facilities. The following information is also available: Selling price per unit $30 Variable costs per unit: Manufacturing 13 Selling and Administrative 7 Fixed costs in total: Manufacturing $128,000 Selling and Administrative 56,000 If a special order is accepted for 10,000 hats at a price of $25 per unit, net income would _____. A. increase by $90,000 B. increase by $50,000 C. increase by $120,000 D. decrease by $24,000

Explanation / Answer

Incremental Revenue If Order of 10 000 units Accepted

Units Sold

10000

Selling Price

$25

Sales Revenue

$250000

Variable Cost

Manufacturing

$130000

Selling and Administrative

$70000

$200000

Net Income

$50000