# Multiple Questions Answers

**Validated Tutorials**

1. It costs Mackey Company $22 of variable and $15 of fixed costs to produce one Panini press which normally sells for $57. A foreign wholesaler offers to purchase 1,000 Panini presses at $35 each. Mackey would incur special shipping costs of $5 per press if the order were accepted. Mackey has sufficient unused capacity to produce the 1,000 Panini presses. If the special order is accepted, what will be the effect on net income?

a. $8,000 increase

b. $8,000 decrease

c. $22,000 decrease

d. $7,000 increase

2. Keller Company manufactures a product with a unit variable cost of $150 and a unit sales price of $264. Fixed manufacturing costs were $720,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 3,000 units at $210 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:

a. Income would decrease by $162,000.

b. Income would decrease by $36,000.

c. Income would increase by $63,000.

d. Income would increase by $180,000.

3. D’Arabian Company incurred the following costs for 70,000 units:

Variable costs $420,000

Fixed costs 392,000

D’Arabian has received a special order from an Armenian company for 3,000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $6,300 for shipping.

If D’Arabian wants to break even on the order, what should the unit sales price be?

a. $6.00

b. $8.10

c. $11.60

d. $13.70

4. Lagasse Company incurred the following costs for 50,000 units:

Variable costs $180,000

Fixed costs 240,000

Lagasse has received a special order from a foreign company for 5,000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $8,500 for shipping.

- 9 years ago

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