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Question - The Bharu Violin Corporation has the capacity to manufacture and sell 5,000 violins each year but is currently only manufacturing and selling 4,800. The following data relate to annual operations at 4,800 units:
Per Violin Selling price $600
Manufacturing costs:
Variable $130
Fixed $270
Selling and administrative costs:
Variable $20 Fixed $40
Woolgar Symphony Orchestra is interested in purchasing Bharu's excess capacity of 200 units but only if they can get the violins for $350 each. This special order would not affect regular sales or the total fixed costs.
If the special order from Woolgar Symphony Orchestra is accepted, what the financial advantage (disadvantage) Bharu for the year?
a. (22,000)
b. ($28,000)
c. $40,000
d. ($10,000)
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