Problem:
In Harley Company it costs $28 per unit ($17 variable and $11 fixed) to make a product that normally sells for $50. A foreign wholesaler offers to buy 4,100 units at $28 each. Harley will incur special shipping costs of $2 per unit. Assuming that Harley has excess operating capacity.
Indicate the net income (loss) Harley would realize by accepting the special order. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)
Reject Order Accept Order Net Income Increase
(Decrease)
Revenues
Costs—Manufacturing
Shipping
Net income/(loss)
The special order should be accepted or rejected?