Ingham inc has the capacity to produce 10000 fax machines

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Reference no: EM13452203

Ingham Inc. has the capacity to produce 10,000 fax machines per year. Ingham currently produces and sells 7,000 units per year. The fax machines normally sell for $100 each. Modem Products has offered to buy 2,000 fax machines from Ingham for $60 each. Unit-level costs associated with manufacturing the fax machines are $15 each for direct labor and $40 each for direct materials. Product-level and facility-sustaining costs are $50,000 and $65,000, respectively.

Required:

a) What is Ingham's current net income?

b) Should Ingham accept the special offer?

Reference no: EM13452203

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