It Costs Galiente Company $46 Per Unit ($27 Variable and $19

question 38

Multiple Choice

It costs Galiente Company $46 per unit ($27 variable and $19 fixed) to produce its product which normally sells for $58 per unit. A Brazilian wholesaler offers to purchase 5000 units at $36 each. Galiente would incur special shipping costs of $5 per unit if the order were accepted. Galiente has sufficient unused capacity to produce the 5000 units. If the special order is accepted what will be the effect on net income?

• A) $50000 decrease
• B) $20000 increase
• C) $15000 increase
• D) $35000 increase

Analyze and understand the average sale period.

Skills in financial statement analysis and understanding liquidity, activity, and efficiency ratios.

Analyze and interpret the debt-to-equity ratio to assess financial leverage and risk.

Evaluate the company's total asset turnover to understand asset efficiency.

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Definitions:

Oligopoly

A market structure characterized by a small number of firms controlling a large majority of the market share, often leading to limited competition.

Monopolistic Competitive

A market structure characterized by many firms selling products that are substitutes but differentiated from one another, leading to non-price competition.

Short Run

A period in economics during which at least one input, such as plant size, is fixed and cannot be changed by a firm.

Long Run

In economics, a period during which all factors of production and costs are variable, and firms can enter or exit the market.