Seekers Company manufactures sonars for fishing boats.Model 70 sells for $250.Seekers produces and sells 5,600 of them per year.Cost data are as follows:

A potential deal has come up for a one-time sale of 32 units at a special price of $120 per unit.The marketing manager states that the sale will not negatively impact the company's regular sales activities and will require the normal variable manufacturing costs and selling and administrative costs.The production manager states that there is plenty of excess capacity and the deal will not impact fixed costs.The controller points out,however,that because the expected increase in revenues are equal to the expected increase in costs to fill the order,the deal will not have any impact on the bottom line.The controller is correct in his statement.

Question

Seekers Company manufactures sonars for fishing boats.Model 70 sells for $250.Seekers produces and sells 5,600 of them per year.Cost data are as follows:
  
A potential deal has come up for a one-time sale of 32 units at a special price of $120 per unit.The marketing manager states that the sale will not negatively impact the company's regular sales activities and will require the normal variable manufacturing costs and selling and administrative costs.The production manager states that there is plenty of excess capacity and the deal will not impact fixed costs.The controller points out,however,that because the expected increase in revenues are equal to the expected increase in costs to fill the order,the deal will not have any impact on the bottom line.The controller is correct in his statement.

Quizplus · Accepted Answer

11ea86ed_2aed_f460_8b27_4ddf2735a0e6_TB3056_00 Less: Expected increase in costs
 11ea86ed_2aed_f461_8b27_9d28033b18aa_TB3056_00

Seekers Company Manufactures Sonars for Fishing Boats