Piersall Company makes a variety of paper products. One product is 20 lb copier paper, packaged 5,000 sheets to a box. One box normally sells for $18. A large bank offered to purchase 3,000 boxes at $14 per box. Costs per box are as follows: No variable marketing costs would be incurred on the order. The company is operating significantly below the maximum productive capacity. No fixed costs are avoidable.
Should Piersall accept the order?
A) Yes, income will increase by $6,000.
B) Yes, income will increase by $9,000.
C) No, income will decrease by $3,000.
D) No, income will decrease by $6,000.
E) It doesn't matter; there will be no impact on income.

Question

Piersall Company makes a variety of paper products. One product is 20 lb copier paper, packaged 5,000 sheets to a box. One box normally sells for $18. A large bank offered to purchase 3,000 boxes at $14 per box. Costs per box are as follows:  No variable marketing costs would be incurred on the order. The company is operating significantly below the maximum productive capacity. No fixed costs are avoidable.
Should Piersall accept the order?
A) Yes, income will increase by $6,000. 
B) Yes, income will increase by $9,000. 
C) No, income will decrease by $3,000. 
D) No, income will decrease by $6,000. 
E) It doesn't matter; there will be no impact on income.

Quizplus · Accepted Answer

The Answer of Piersall Company makes a variety of paper products. One product is 20 lb copier paper, packaged 5,000 sheets to a box. One box normally sells for $18. A large bank offered to purchase 3,000 boxes at $14 per box. Costs per box are as follows:  No variable marketing costs would be incurred on the order. The company is operating significantly below the maximum productive capacity. No fixed costs are avoidable.
Should Piersall accept the order?
A) Yes, income will increase by $6,000. 
B) Yes, income will increase by $9,000. 
C) No, income will decrease by $3,000. 
D) No, income will decrease by $6,000. 
E) It doesn't matter; there will be no impact on income.

Piersall Company Makes a Variety of Paper Products