Micro Enterprises Has the Capacity to Produce 10,000 Widgets

question 1

Multiple Choice

Micro Enterprises has the capacity to produce 10,000 widgets a month,and currently makes and sells 9,000 widgets a month.Widgets normally sell for $6 each,and cost an average of $5 to make,including fixed costs.The monthly fixed costs are $18,000.Coyote Corp.has offered to buy 1,000 widgets at $4 each. What other factors should be taken into consideration?

• A)The impact on the normal selling price of $6
• B)Will an additional shift be needed to complete the order?
• C)Are future orders from Coyote likely?
• D)Does the special price comply with the Robinson-Patman Act?
• E)All of the above

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Definitions:

Insurance Expense

The cost allocated to a period for holding insurance policies, protecting against various risks.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period of time, resulting in a net income or loss.

Salaries Expense

The total amount paid to employees for services rendered during a specific period, recorded as an expense in financial statements.

Salaries Payable

A liability account that records the amounts owed to employees for work performed but not yet paid.