Question: Byways Production has an annual capacity of 80 000 units per

Byways Production has an annual capacity of 80,000 units per year. Currently, the company is making and selling 78,000 units a year. The normal sales price is $100 per unit; variable costs are $65 per unit, and total fixed expenses are $2,000,000. An out-of-state distributor has offered to buy 5,000 units at $75 per unit.
Byways' cost structure should not change as a result of this special order.

Required
By how much will Byways' income change if the company accepts this order?


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  • CreatedFebruary 21, 2014
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