Persua 1. Special Order Decision (accept or reject) We could accept a special $3

Question

Persua 1. Special Order Decision (accept or reject) We could accept a special $30 income would increase by? order at $50 per unit for 10,000 units. Our Variable costs are per unit. Additional fixed costs would be $130,000. By accepting this special order, net 2. Drop a Division Decision (continue or discontinue) Jones Division has the following income statement: Sales 20,000 u c C.M F. C Net Loss 15,000 If we discontinue the Jones Division, we could save 60% of the Fixed Costs. Should we discontinue the Jones Division? How much would overall net income go up or down by if we did drop Jones Division? A box costs $30 to make. If we sell the box at cost plus 30%, what would the selling price be for a box? 3,

Explanation / Answer

1) Particulars Amount($) Sales 500000 Variable cost 300000 Contribution 200000 Fixed cost 130000 Net Income 70000 2) Net Income if he drops jones division Particulars Amount($) Sales 20000 Variable cost 5000 Contribution 15000 Fixed cost 8000 Net Income 7000 3) Box cost $ 30 Margin(30*30*/100) 9 Selling price of box $39

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