Baden Company manufactures a product with a unitvariable cost of $50 a

QUESTION

Baden Company manufactures a product with a unitvariable cost of $50 and a unit sales price of $88. Fixedmanufacturing costs were $240,000 when 10,000 units were producedand sold. The company has a one-time opportunity to sell anadditional 1,000 units at $70 each in a foreign market which woul
Present scene: Contribution pu = Sale Priice pu-var cost pu = 88-50=38pu Total Cont = cont pu x No of units = 38 x 10,000= 380,000 Less Fixed cost 240,000 ————————— Profit = Total Cont-Fixed cost = 140,000 Thus company is already

vering all its Fixed cost at 10,000units., Thus addl units manufactured will add to profit. Addl Cont is 70-50 = 20 x 1000 = $20,000 Thus addl income is $20,000 Ans is B

ANSWER:

CLICK REQUEST FOR  AN EXPERT SOLUTION