Micro enterprises has the capacity to produce 10000 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 $18,000. 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

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Financial Accounting: Micro enterprises has the capacity to produce 10000 widgets
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