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What the incremental income from accepting the order

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Reference no: EM133131032

Question - A company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units:

Direct materials $5

Direct labor 15

Variable overhead 6

Fixed overhead 6

A foreign company wants to purchase 2,000 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $4,000 in order to stamp the foreign company's name on the product. What the incremental income (loss) from accepting the order?

a. $6,000.

b. $2,000.

c. $(6,000).

d. $(2,000).

Reference no: EM133131032

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