Reggie Corporation Manufactures a Single Product with the Following Unit

question 24

Multiple Choice

Reggie Corporation manufactures a single product with the following unit costs for 1,000 units: Recently, a company approached Reggie Corporation about buying 100 units for $5,100 each.Currently, the models are sold to dealers for $7,800.Reggie Corporation's capacity is sufficient to produce the extra 100 units.No additional selling expenses would be incurred on the special order.
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How much will income change if the special order is accepted?

• A) increase by $398,400
• B) decrease by $180,000
• C) increase by $111,600
• D) no change

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Definitions:

Medical Deductions

Expenses for healthcare that exceed a certain percentage of adjusted gross income and can be itemized for tax deductions, including payments for doctors, prescriptions, and certain medical equipment.

Floor

In finance, the lowest possible value or limit for prices, wages, or other financial variables.

Personal Casualty Loss

Financial loss resulting from the damage, destruction, or loss of an individual’s property from sudden, unexpected, or unusual events.

Deduction

An amount that can be subtracted from gross income to reduce the total taxable income, leading to lower tax liability.