Mobile Concepts makes special equipment used in cell towers.Each unit sells for $400.Mobile Concepts uses just-in-time inventory procedures;it produces and sells 12,500 units per year.It has provided the following income statement data:

A foreign company has offered to buy 100 units for a reduced sales price of $250 per unit.The marketing manager says the sale will have no negative impact on the company's regular sales.The sales manager says that this sale will not require any variable selling and administrative costs.The production manager reports that there is plenty of excess capacity to accommodate the deal without requiring any additional fixed costs.If Mobile Concepts accepts the deal,how will this impact operating income? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Question

Mobile Concepts makes special equipment used in cell towers.Each unit sells for $400.Mobile Concepts uses just-in-time inventory procedures;it produces and sells 12,500 units per year.It has provided the following income statement data:

A foreign company has offered to buy 100 units for a reduced sales price of $250 per unit.The marketing manager says the sale will have no negative impact on the company's regular sales.The sales manager says that this sale will not require any variable selling and administrative costs.The production manager reports that there is plenty of excess capacity to accommodate the deal without requiring any additional fixed costs.If Mobile Concepts accepts the deal,how will this impact operating income? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Quizplus · Accepted Answer

A)
 11ea86ed_2af1_75e1_8b27_555d875c2140_TB3056_00 *Differential cost per unit = (1,200,000 / 12,500)= 96.00

Mobile Concepts Makes Special Equipment Used in Cell Towers