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Compute the effect on the net income

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Question - The following information relates to a product produced by Bayfield Company:

Direct materials $50

Direct labor 35

Variable overhead 30

Fixed overhead 40

Unit cost $155

Fixed selling costs are $1,000,000 per year. Although production capacity is 900,000 units per year, Bayfield expects to produce only 800,000 units next year. The product normally sells for $180 each. A customer has offered to buy 60,000 units for $150 each. Compute the effect on the net income if Bayfield accepts the special order.

Reference no: EM131730086

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