Problem #2 - special order. Your per unit cost structure for Happiness is shown below. A...

 

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Problem #2 - special order. Your per unit cost structure for "Happiness" is shown below. A new company which has never purchased from you before approaches you and offers to buy 10,000 units of "Happiness" for $24.50/unit. You would need to spend an additional $20,000 to rent a machine to fulfill the order but otherwise you have the capacity. Selling Price Direct Material Direct Labor Variable Overhead rent for machine) Fixed Overhead rent for machine) $39.95 $11.20 $ 8.45 $ 3.65 (does not include the $20,000 $5.55 (does not include the $20,000 Without considering anything but the numbers, should you accept the offer if you wish to maximize your profits in the short- term? O No, because net income will decrease by $8,000 O No, because net income will decrease by $43,500 No, because net income will decrease by $63,500 Yes, because net income will increase by $12,000 Problem #2 - special order. Your per unit cost structure for "Happiness" is shown below. A new company which has never purchased from you before approaches you and offers to buy 10,000 units of "Happiness" for $24.50/unit. You would need to spend an additional $20,000 to rent a machine to fulfill the order but otherwise you have the capacity. Selling Price Direct Material Direct Labor Variable Overhead rent for machine) Fixed Overhead rent for machine) $39.95 $11.20 $ 8.45 $ 3.65 (does not include the $20,000 $5.55 (does not include the $20,000 Without considering anything but the numbers, should you accept the offer if you wish to maximize your profits in the short- term? O No, because net income will decrease by $8,000 O No, because net income will decrease by $43,500 No, because net income will decrease by $63,500 Yes, because net income will increase by $12,000

Answer rating: 100% (QA)

Yes because net income will increase by 12000 Explanation To calculate the net income we need to c... View the full answer