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The Following Information Relates to a Product Produced by Creamer

question 73

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The following information relates to a product produced by Creamer Company: Fixed selling costs are £500,000 per year, and variable selling costs are £12 per unit sold. Although production capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for £120 each. A customer has offered to buy 60,000 units for £90 each.
If the firm produces the special order, the effect on income would be a
The following information relates to a product produced by Creamer Company: Fixed selling costs are £500,000 per year, and variable selling costs are £12 per unit sold. Although production capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for £120 each. A customer has offered to buy 60,000 units for £90 each. If the firm produces the special order, the effect on income would be a   A)  £360,000 increase. B)  £360,000 decrease. C)  £540,000 increase. D)  £540,000 decrease.


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