Costa company has a capacity of 40000 units per year and is, Ask an Expert

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Costa Company has a capacity of 40,000 units per year and is currently selling 35,000 for $400 each. Barton Company has approached Costa about buying 2,000 units for only $300 each. The units would be packaged in bulk, saving Costa $20 per unit when compared to the normal packaging cost. Normally, Costa has a variable cost of $280 per unit. The annual fixed cost of $2,000,000 would be unaffected by the special order. What would be the impact on profits if Costa were to accept this special order?

a) Profits would decrease $200,000.

b) Profits would increase $40,000.

c) Profits would increase $60,000.

d) Profits would increase $80,000.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9793168

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