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It Costs Fortune Company $12 of Variable and $5 of Fixed

question 73

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It costs Fortune Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35.A foreign wholesaler offers to purchase 1,000 scales at $16 each.Fortune would incur special shipping costs of $2 per scale if the order were accepted.Fortune has sufficient unused capacity to produce the 1,000 scales.If the special order is accepted, what will be the effect on net income?


Definitions:

Vendor

A person or business that provides products or services to another party, often as part of a supply chain.

Sales Prices

The set amount of money that a product or service is offered for sale to customers.

Bank Reconciliation

The process of comparing and matching figures from the accounting records against those presented on a bank statement to ensure consistency and accuracy in financial records.

Journal Entries

The method by which financial transactions are recorded in a company's accounting records, noting the accounts affected and the amounts involved.

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