Seville Company manufactures a product with a unit variable cost of $42 and a unit sales price of $75. Fixed manufacturing costs were $180,000 when 10,000 units were produced and sold, equating to $18 per unit. The company has a one-time opportunity to sell an additional 1,000 units at $55 each in an international market which would not affect its present sales. The company has sufficient capacity to produce the additional units but would incur $2 of additional shipping cost per unit.
2006-10-23 10:53:54 · 1 answers · asked by coolgal 1 in Business & Finance ➔ Personal Finance
If you're still making money then yes you should always go with the deal...
The problem gave you every reason...Sufficent capacity...No impact on domestic sales.
Since domestic sales has already amortized the fixed cost any additional units only costs the variable cost.
You're gonna make $11/unit.
2006-10-23 20:29:02 · answer #1 · answered by feanor 7 · 0⤊ 0⤋