Reggie Corporation manufactures a single product with the following unit costs for 1,000 units: Recently, a company approached Reggie Corporation about buying 100 units for $5,100 each.Currently, the models are sold to dealers for $7,800.Reggie Corporation's capacity is sufficient to produce the extra 100 units.No additional selling expenses would be incurred on the special order.
How much will income change if the special order is accepted?

A) increase by $398,400
B) decrease by $180,000
C) increase by $111,600
D) no change

Question

Reggie Corporation manufactures a single product with the following unit costs for 1,000 units: Recently, a company approached Reggie Corporation about buying 100 units for $5,100 each.Currently, the models are sold to dealers for $7,800.Reggie Corporation's capacity is sufficient to produce the extra 100 units.No additional selling expenses would be incurred on the special order.
How much will income change if the special order is accepted?
 
A) increase by $398,400 
B) decrease by $180,000 
C) increase by $111,600 
D) no change

Quizplus · Accepted Answer

SUPPORTING CALCULATIONS:
100 × [$5,100- $2,400 - $960 - ($1,800 × 0.30) -($840 × 0.10)] = $111,600

Reggie Corporation Manufactures a Single Product with the Following Unit