Reference no: EM133909407

Problem

Profitability of orders and opportunity cost Dawson Company produces and sells 152,000 boxes of specialty foods each year. Each box contains the same assortment of food. The company has computed the following annual costs: Cost Item Total costs Variable production costs $760,000 Fixed production costs 912,000 Variable selling costs 608,000 Fixed selling and administrative costs 380,000 Total costs $2,660,000 Dawson normally charges $48 per box. A new distributor has offered to purchase 15,000 boxes at a special price of $42 per box. Dawson will incur additional packaging costs of $1 per box to complete this order. Required (a) Suppose Dawson has surplus capacity to produce 15,000 more boxes. What will be the effect on Dawson's income if it accepts this order? Answer 1 $Answer 2 (b) Suppose that instead of having surplus capacity to produce 15,000 more boxes. Get the instant assignment help. Dawson has surplus capacity to produce only 6,000 more boxes. What will be the effect on Dawson's income if it accepts the new order for 15,000 boxes?