Special Orders - Action Plan Identify all revenues that...

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Special Orders Cobb Company incurs a cost of $28 per unit, of which $18 is variable, to make a product that normally sells for $42. A foreign wholesaler offers to buy 5,000 units at $25 each. Cobb will incur shipping costs of $1 per unit. Compute the increase or decrease in net income Cobb will realize by accepting the special order, assuming Cobb has excess operating capacity. Should Cobb Company accept the special order? Solution
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Unformatted text preview: Action Plan Identify all revenues that will change as a result of accepting the order. Identify all costs that will change as a result of accepting the order, and net this amount against the change in revenues. Reject Accept Net Income Increase (Decrease) $0 $125,000 $125,000 0 95,000 * (95,000) $0 $ 30,000 $ 30,000 Given the result of the analysis, Cobb Company should accept the special order....
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Special Orders - Action Plan Identify all revenues that...

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