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Question 4

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It costs Ross Co. $24 of variable and $10 of fixed costs to produce one bathroom scale which normally sells for $70. A foreign wholesaler offers to purchase 2,000 scales at $30 each. Ross would incur special shipping costs of $2 per scale if the order were accepted. Ross has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income?

 

 

 

http://edugen.wiley.com/edugen/art/test/ctb_print/radio_off.gif

$12,000 decrease

 

 

 

http://edugen.wiley.com/edugen/art/test/ctb_print/radio_off.gif

$8,000 increase

 

 

 

http://edugen.wiley.com/edugen/art/test/ctb_print/radio_off.gif

$8,000 decrease

 

 

 

http://edugen.wiley.com/edugen/art/test/ctb_print/radio_off.gif

$60,000 increase