The following information relates to a product produced by Bayfield Company

The following information relates to a product produced by Bayfield Company

http://hwpool.com/product/following-information-relates-product-produced-bayfield-company/

 

  1. (TCO 5) The following information relates to a product produced by Bayfield Company:
Direct materials $70
Direct labor 40
Variable overhead 45
Fixed overhead 50
Unit cost $205

Fixed selling costs are $1,000,000 per year. Although production capacity is 900,000 units per year, Bayfield expects to produce only 800,000 units next year. The product normally sells for $170 each. A customer has offered to buy 60,000 units for $160 each. Compute the effect on the net income if Bayfield accepts the special order.

 

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