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Discuss what would be the effect on income - increase

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Reference no: EM131781141

Noreaster Company produces a product that has a regular selling price of $360 per unit. At a typical monthly production volume of 2,000 units, the product's average unit cost of goods sold amounts to $270. Included in this average is $120,000 of fixed manufacturing costs. All selling and administrative costs are fixed and amount to $30,000 per month.

Noreaster Company has just received a special order for 1,000 units at $240 per unit. The buyer will pay transportation, and the regular selling price will not be affected if Noreaster accepts the order.

Assuming Noreaster Company has excess capacity, what would be the effect on income - increase or (decrease)?

Reference no: EM131781141

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Discuss what would be the effect on income - increase : Noreaster Company produces a product that has a regular selling price of $360 per unit. At a typical monthly production volume of 2,000 units
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