Answer: $36,000
Explanation: In case company has to accept the offer, the order selected must result in addition to value to the company , that is, the order must make profit to the firm. We can calculate profit as follows :-
Profit = Revenue - cost
= (6,000 units * $30) - (6000 units * $20) - (6,000 units * $4 )
= $36,000
Hence, company should accept the offer.
If Maize Company incurs a cost of $35 per unit, of which $20 is variable, to make a product that normally sells for $58. A foreign wholesaler offers to buy 6,000 units at $30 each. Maize will incur additional costs of $4 per unit to imprint a logo and to pay for shipping. The increase or decrease in net income Maize will realize by accepting the special order is $36,000
Net income Increase(Decrease)
Incremental revenue $180,000
(6,000×$30)
Incremental cost $144,000
[($20+$4)×6,000]
Increase in net income $36,000
($180,000-$144,000)
Based on the above calculation Maize Company should accept the special order as there is increase in net income.
Inconclusion if Maize Company incurs a cost of $35 per unit, of which $20 is variable, to make a product that normally sells for $58. A foreign wholesaler offers to buy 6,000 units at $30 each. Maize will incur additional costs of $4 per unit to imprint a logo and to pay for shipping. The increase or decrease in net income Maize will realize by accepting the special order is $36,000
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