Van Horn, Inc. has been producing and selling 20,000 meters a year. The company has the capacity to produce 25,000 meters with its present facilities. The following information is also available:

-If a special order is accepted for 5,000 meters at a price of $250 per unit, net income would

Question

Van Horn, Inc. has been producing and selling 20,000 meters a year. The company has the capacity to produce 25,000 meters with its present facilities. The following information is also available:
 
-If a special order is accepted for 5,000 meters at a price of $250 per unit, net income would

Quizplus · Accepted Answer

The special order will increase net income by $200,000 because the company will receive $1,250,000 (5,000 meters x $250 per unit) for the order and its costs will only increase by $850,000 (5,000 meters x $170 per unit).