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27 August, 16:18

Rylan Corporation received an offer from an exporter for 25,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:

Domestic unit sales price $22

Unit manufacturing costs:

Variable 11

Fixed 6

What is the differential cost from the acceptance of the offer?

a. $125,000 incomeb. $25,000 lossc. $125,000 lossd. $25,000 income

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  1. 27 August, 17:57
    0
    The correct answer is A.

    Explanation:

    Giving the following information:

    Rylan Corporation received an offer from an exporter for 25,000 units of a product at $16 per unit.

    Unit manufacturing costs:

    Variable 11

    Because it is a special offer and there is unused capacity, we will not take into account the fixed costs.

    Effect on income = 25,000 * (16 - 11) = $125,000 increase
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