Capacity to produce widgets

Assignment Help Financial Accounting

Reference no: EM131267687

Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each. On this information alone, should Micro accept the offer?

A. No, because it will lose $1 per unit

B. No, because it will lose $2 per unit

C. No, because it will exceed capacity

D. Yes, because it makes $1 per unit in the short run

E. Unable to determine

Reference no: EM131267687

Questions Cloud

Determine their taxable income : A Corporation has the following information for 2014. Using schedule M-1 of form 1120, determine their taxable income:

Prepare budgets-budget figures are often biased : Because people prepare budgets, budget figures are often biased. Which is true?

In negotiating a price-minimum acceptable selling price : The Cintron Company sells their single product for $60 per unit. Unit product costs are as follows: Direct materials$20 Direct labor20 Manufacturing overhead4 Total$44 A special order to purchase 10,000 units was recently received. There is enough ca..

When activities are performed inside firms : When activities are performed inside firms, which of the following is true?

Capacity to produce widgets : Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,00..

Periodic inventory-calculate amount of net income reported : ABC Company employs a periodic inventory system and sells its inventory to customers for $20 per unit. ABC Company had the following inventory information available for the month of May: Calculate the amount of net income reported on ABC Company's in..

Periodic inventory system-balance sheet using lifo method : ABC Company employs a periodic inventory system and sells its inventory to customers for $20 per unit. ABC Company had the following inventory information available for the month of May: Calculate the dollar amount of ending inventory shown on ABC's ..

Prepare comparative statements of shareholders equity : Listed below are the transactions that affected the shareholders’ equity of Branch-Rickie Corporation during the period 2016–2018. Prepare the journal entries that Branch-Rickie recorded during the three-year period for these transactions. Prepare co..

What is the the internal rate of return for the machine : Hincapie Manufacturing is evaluating investing in a new metal stamping machine costing $30,924. Hincapie estimates that it will realize $12,000 in annual cash inflows for each year of the machine's 3-year useful life. Approximately, what is the the i..

User Account

All Pages