Stryker Industries received an offer from an exporter for 15,000 units of product at $17.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available: Domestic unit sales price $20 Unit manufacturing costs: Variable 11 Fixed 1 What is the amount of income or loss from acceptance of the offer? A. $94,500 loss B. $97,500 income C. $37,500 income D. $37,500 loss
Question
Stryker Industries received an offer from an exporter for 15,000 units of product at 20 Unit manufacturing costs: Variable 11 Fixed 1 What is the amount of income or loss from acceptance of the offer? A. 97,500 income C. 37,500 loss
Solution
To calculate the income or loss from acceptance of the offer, we need to consider the offer price and the unit manufacturing costs (both variable and fixed).
Step 1: Calculate the total revenue from the offer The offer is for 15,000 units at 17.50/unit = $262,500.
Step 2: Calculate the total manufacturing cost The unit manufacturing cost is the sum of the variable and fixed costs, which is 1 = 12/unit = $180,000.
Step 3: Calculate the income or loss The income or loss from the offer is the total revenue minus the total manufacturing cost. So, the income or loss would be 180,000 = $82,500.
So, the answer is not listed in the options. There seems to be a mistake in the question or the options provided.
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