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It costs Lannon Fields $14 of variable costs and $6 of allocated fixed costs to produce an industrial trash can that sells for $30. A buyer in Mexico offers to purchase 3,000 units at $18 each. Lannon Fields has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income?

a. Decrease $6,000

b. Increase $6,000

c. Increase $54,000

d. Increase $12,000

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M947965

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