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The Max Company manufactures wiring tools.The company is currently producing well below its full capacity. The Beatson COMPANY has approached Max with an offer to buy 5,000 tools at $17.50 each. Max sells its tools wholesale for $18.50 each. The average cost per unit is $18.30, of which $2.70 is fixed costs.

a. If Max were to accept Beatson's offer, what would be the increase In Max's operating profits?

B. Assume that Max is operating at full capacity. If Max were to accept Beatson's offer, what would be the change in Max's operating profits?

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Accounting Basics, Accounting

Category:- Accounting Basics
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