Answer:
Effect on income= $11,280 increase
Explanation:
Giving the following information:
A special order has been placed by the customer for 2,200 units of the shiny disc for $27 a unit.
<u>Because it is a special order, we will take into account only the differential fixed costs. </u>
<u>First, we need to calculate the total unitary cost and differential fixed costs:</u>
Total unitary variable cost= 5.80 + 4 + 2.9 + 1.9
Total unitary variable cost= $14.6
Total fixed cost= $16,000
<u>Now, we can determine the effect on income:</u>
Effect on income= 2,200*(27 - 14.6) - 16,000
Effect on income= $11,280 increase