Bluebird Mfg

question 16

Multiple Choice

Bluebird Mfg.has received a special one-time order for 15,000 bird feeders at $3 per unit.Bluebird currently produces and sells 75,000 units at $7.00 each.This level represents 80% of its capacity.Production costs for these units are $3.50 per unit,which includes $2.25 variable cost and $1.25 fixed cost.If Bluebird accepts this additional business,the effect on net income will be:

• A)$45,000 increase.
• B)$11,250 increase.
• C)$33,750 increase.
• D)$7,500 decrease.
• E)$33,750 decreasE.

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Definitions:

Demand Schedule

A chart indicating the amount of a product or service buyers are prepared and capable of buying at different price levels.

Shortage/Surplus

A state in the marketplace where the demand for a good surpasses its supply, causing a shortage, or where the supply of a product outpaces its demand, resulting in a surplus.

Demand Schedule

A chart detailing the amount of a product that buyers are ready and capable of buying at different price levels.

Supply Schedule

A table or graph showing the quantity of a product that producers are willing to supply at different prices over a specified period.