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Unformatted text preview: 2,500 10,000 Other 5,000 5,000 Net income $ 18,500 $ 26,000 Should this company replace the old machine with the new one ? PROBLEM 2: Pacific Co. that has a capacity of 100,000 units is currently producing and selling 90,000 units of product each year at a regular price of $ 2 Assuming that the variable cost per unit is $ 1, and the annual fixed cost is $ 45,000; a) Prepare an income statement using variable costing approach. The company has just received an order that calls for 10,000 units at $ 1,20 for a total of $ 12,000. The acceptance of this order will not affect regular sales. b) Should this company accept this offer ?...
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- Spring '09
- Decision Making