4. Incremental analysis - accepting a special order Essential Company normally produces and sells 4,000 video monitors for personal computers each month. Variable manufacturing costs amount to $62 per unit, and fixed manufacturing costs are $170,000 per month. The regular sales price of the monitors is $140 per unit. The company is considering a special order from a foreign computer maker to buy an additional 1,000 monitors per month at a special price of $70 per unit. Filling this special order would not affect Essential Company's regular sales volume or fixed manufacturing costs. (a) The average cost per unit at the 4,000-unit-per-month production level is per unit. $ (b) The average cost per unit at the 5,000-unit-per-month production level is per unit. $ (c) The amount of increase or decrease (indicate the correct term) in Essential Company's operating income that would result from accepting the special order is $.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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4. Incremental analysis - accepting a special order
Essential Company normally produces and sells 4,000 video monitors for
personal computers each month. Variable manufacturing costs amount to $62
per unit, and fixed manufacturing costs are $170,000 per month. The regular
sales price of the monitors is $140 per unit. The company is considering a special
order from a foreign computer maker to buy an additional 1,000 monitors per
month at a special price of $70 per unit. Filling this special order would not affect
Essential Company's regular sales volume or fixed manufacturing costs.
(a) The average cost per unit at the 4,000-unit-per-month production level is
per unit.
$
(b) The average cost per unit at the 5,000-unit-per-month production level is
per unit.
$
(c) The amount of increase or decrease (indicate the correct term) in Essential
Company's operating income that would result from accepting the special order is
$
Transcribed Image Text:4. Incremental analysis - accepting a special order Essential Company normally produces and sells 4,000 video monitors for personal computers each month. Variable manufacturing costs amount to $62 per unit, and fixed manufacturing costs are $170,000 per month. The regular sales price of the monitors is $140 per unit. The company is considering a special order from a foreign computer maker to buy an additional 1,000 monitors per month at a special price of $70 per unit. Filling this special order would not affect Essential Company's regular sales volume or fixed manufacturing costs. (a) The average cost per unit at the 4,000-unit-per-month production level is per unit. $ (b) The average cost per unit at the 5,000-unit-per-month production level is per unit. $ (c) The amount of increase or decrease (indicate the correct term) in Essential Company's operating income that would result from accepting the special order is $
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