Use the following information for the next 3 questions.
Taylor Enterprises sells its product for $40 per unit. Taylor recently received a special order from a customer for 20,000 units. Production costs per unit for regular sales are:
-Suppose the special order price is $600,000 for all 20,000 units, and assume that Taylor has sufficient capacity to fill the special order. Should it be accepted?
A) Yes, because profits will increase by $120,000
B) No, because profits will decrease by $200,000
C) No, because profits will decrease by $40,000
D) Yes, because profits will increase by $40,000

Question

Use the following information for the next 3 questions.
Taylor Enterprises sells its product for $40 per unit. Taylor recently received a special order from a customer for 20,000 units. Production costs per unit for regular sales are: 
-Suppose the special order price is $600,000 for all 20,000 units, and assume that Taylor has sufficient capacity to fill the special order. Should it be accepted?
A) Yes, because profits will increase by $120,000 
B) No, because profits will decrease by $200,000 
C) No, because profits will decrease by $40,000 
D) Yes, because profits will increase by $40,000

Quizplus · Accepted Answer

The special order price is $600,000 for 20,000 units, which means the price per unit is $30. If the cost per unit is less than $30, accepting the order will increase profits. Assuming the cost per unit is less than $30, the order should be accepted, resulting in a profit increase of $40,000.

Use the Following Information for the Next 3 Questions