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Unformatted text preview: fixed cost will be per unit. From this information, LaSalle should purchase the component from Jasper because it will save them $3,075. 18. 1. The two alternatives are to either accept or decline the offer from the new customer. 2. Otonic Company should accept the proposal from the customer as it will earn them $.95 in operating income for each unit sold. Thus, they would gain a total of $2,185 in revenue from the sale. 19. Ortonic should not accept the special order because profit will decrease by $2300 (or a dollar a unit) because of the labeling fee. 20. Overall profit would decrease by $60,000 because the company still has to account for the direct fixed expenses (they are sunk costs). 21. Overall profit would decrease by $140,000 because of the original $60,000 from dropping product C and the $80,000 loss that product C would cause upon product B (10% of their CM). 22....
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This note was uploaded on 04/07/2008 for the course ACCTG 213 taught by Professor Tomcal during the Spring '08 term at University of Oregon.
- Spring '08