Sound Systems reported the following results from the sale of 24 000 radios:

Sound Systems expects similar operating results during the current year. Rhythm Systems has offered to purchase 3000 radios at $16 each. Sound Systems estimates approximately 5000 additional units could be made with the capacity currently available in the factory. The owner of Sound Systems is in favour of accepting the order. She feels it would be profitable because no variable selling costs will be incurred. The plant manager is against acceptance because his 'full cost' of production is $17.
Determine the change in profit if the special order is accepted.

Question

Sound Systems reported the following results from the sale of 24 000 radios:

Sound Systems expects similar operating results during the current year. Rhythm Systems has offered to purchase 3000 radios at $16 each. Sound Systems estimates approximately 5000 additional units could be made with the capacity currently available in the factory. The owner of Sound Systems is in favour of accepting the order. She feels it would be profitable because no variable selling costs will be incurred. The plant manager is against acceptance because his 'full cost' of production is $17.
Determine the change in profit if the special order is accepted.

Quizplus · Accepted Answer

The Answer of Sound Systems reported the following results from the sale of 24 000 radios:

Sound Systems expects similar operating results during the current year. Rhythm Systems has offered to purchase 3000 radios at $16 each. Sound Systems estimates approximately 5000 additional units could be made with the capacity currently available in the factory. The owner of Sound Systems is in favour of accepting the order. She feels it would be profitable because no variable selling costs will be incurred. The plant manager is against acceptance because his 'full cost' of production is $17.
Determine the change in profit if the special order is accepted.

Sound Systems Reported the Following Results from the Sale of 24