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

Question

In Harley Company it costs $31 per unit ($17 variable and $14 fixed) to make a product that normally sells for $41. A foreign wholesaler offers to buy 3,570 units at $23 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 In Harley Company it costs $31 per unit ($17 variable and $14 fixed) to make a product that normally sells for $41. A foreign wholesaler offers to buy 3,570 units at $23 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.)

Explanation / Answer

Please find the answer as follows:

Reject Order Accept Order Net Income Increase/Decrease Revenues 0 82110 82110 Costs-Manufacturing 0 60690 -60690 Shipping 0 3570 -3570 Net Income/Loss 0 17850 17850

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