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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:

CCA Class

In Canadian taxation, a classification system for capital cost allowance that categorizes assets for depreciation purposes.

Erosion Cost

Costs incurred from the gradual loss or diminishing in value of an asset over time.

Mid-range Camper

A type of recreational vehicle or accommodation designed with features and amenities that strike a balance between affordability and comfort, catering to a wide range of consumers.

Class A

A classification of common or preferred shares that typically comes with more voting rights or other benefits compared to other classes.

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