Highbank Company is operating at 80% of its manufacturing capacity of 62,000 product units per year. A customer has offered to buy an additional 10,000 units at $17 each and sell them outside the country so as not to compete with Highbank. The following data are available:
In producing 10,000 additional units fixed overhead costs would remain at their current level but incremental variable overhead costs of $0.75 per unit would be incurred. What is the effect on total income if Highbank accepts this order?

Question

Highbank Company is operating at 80% of its manufacturing capacity of 62,000 product units per year. A customer has offered to buy an additional 10,000 units at $17 each and sell them outside the country so as not to compete with Highbank. The following data are available: 
In producing 10,000 additional units fixed overhead costs would remain at their current level but incremental variable overhead costs of $0.75 per unit would be incurred. What is the effect on total income if Highbank accepts this order?

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The Answer of Highbank Company is operating at 80% of its manufacturing capacity of 62,000 product units per year. A customer has offered to buy an additional 10,000 units at $17 each and sell them outside the country so as not to compete with Highbank. The following data are available: 
In producing 10,000 additional units fixed overhead costs would remain at their current level but incremental variable overhead costs of $0.75 per unit would be incurred. What is the effect on total income if Highbank accepts this order?

Highbank Company Is Operating at 80% of Its Manufacturing Capacity