Question 1 Sheridan Company manufactures a product with a unit variable cost of

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Question 1 Sheridan Company manufactures a product with a unit variable cost of $100 and a unit sales price of $166. Fixed manufacturing costs were $480000 when 10000 units were produced and sold. The company has a one-time opportunity to sell an additional 1000 units at $145 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows: Income would decrease by $3000. O Income would increase by $45000 Income would increase by $3000 Income would increase by $145000 Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Income would increase by $45000

As company have sufficent production capacity therefore no fixed cost will occur and only variable cost will occur.

Particulars Unprocess Sales (1000 x 145)        145,000.00 Less: Cost (1000 x 100)        100,000.00 Increase in Profit          45,000.00

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