In Harley Company it costs $31 per unit ($18 variable and $13 fixed) to make a p

ID: 2482188 • Letter: I

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In Harley Company it costs $31 per unit ($18 variable and $13 fixed) to make a product that normally sells for $49. A foreign wholesaler offers to buy 3,560 units at $26 each. Harley will incur special shipping costs of $1 per unit. Assuming that Harley has excess operating capacity. Indicate the net income (loss) Harley would realize by accepting the special order. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.) Reject Order Accept Order Net Income Increase (Decrease) Revenues $ $ $ Costs—Manufacturing Shipping Net income/(loss) $ $ $ The special order should be .

Explanation / Answer

Order should be Accepted. This will generate additional revenue

Particulars $ $ Additional Revenue (3560* 26) 92560 Special Shipping cost ($ 3560*1) -3560 Variable Cost (3560* 18) -64080 Total Addditional Cost -67640 Net Income Increase 24920

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In Harley Company it costs $31 per unit ($17 variable and $14 fixed) to make a p

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In Harley Company it costs $31 per unit ($18 variable and $13 fixed) to make a p

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