The Bharu Violin Corporation Has the Capacity to Manufacture and Sell

question 374

Multiple Choice

The Bharu Violin Corporation has the capacity to manufacture and sell 5,000 violins each year but is currently only manufacturing and selling 4,800. The following data relate to annual operations at 4,800 units: Woolgar Symphony Orchestra is interested in purchasing Bharu's excess capacity of 200 units but only if they can get the violins for $350 each. This special order would not affect regular sales or the total fixed costs.Assume that Bharu is manufacturing and selling at capacity (5,000 units) . Any special order will mean a loss of regular sales. Under these conditions if the special order from Woolgar Symphony Orchestra is accepted, the financial advantage (disadvantage) Bharu for the year should be:

• A) $20,000
• B) ($22,000)
• C) ($28,000)
• D) ($50,000)

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