Determine the incremental income or loss

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Reference no: EM13786695

Takoma Enterprises produces replacement knobs. Each knob consists of $1.20 of variable costs and $.90 of fixed costs and sells for $4.50. A Swiss wholesaler offers to buy 8,000 units at $1.40 each, of which Takoma has the capacity to produce. Takoma will incur extra shipping costs of $.15 per knob.

Instructions: Determine the incremental income or loss that Takoma Enterprises would realize by accepting the special order.

Reference no: EM13786695

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