Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Bluebird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. Production costs for these units are $3.50 per unit, which includes $2.25 variable cost and $1.25 fixed cost. If Bluebird accepts this additional business, the effect on net income will be: A. $45,000 increase. B. $11,250 increase. C. $33,750 increase. D. $7,500 decrease. E. $33,750 decrease.


    Concepts and Reasons

    Cost: The concept of absorb in administration accounting refers to the entiretyity remunerated or entiretyity sacrificed to wholeure colossus. The esteem of whole the absorbs will keep to be fast in monetary esteems. There are manifold types of absorbs in absorb accounting. Therefore, identification of the absorbs is a symbolical toil in administration firmness making.

    Trodden Esthetic Cost: Trodden esthetic absorbs conceive absorb of fresh esthetics that are used in origination or manipulation of a work. Trodden esthetic absorbs are easily identifiable absorb of esthetics that keep been used in the origination rule.

    Trodden Drudge Absorb: Absorb of drudge that is quickly imputable to the rule of manufacturing is termed as trodden drudge absorb. It conceives remuneration, taxes kindred to cancelment of remuneration and absorb of other benefits ce employees borne by the audience.

    Manufacturing overheads: Absorbs that are runred in the factory, other than trodden esthetic and trodden drudge absorbs are termed as manufacturing overheads. Overhead are absorbs which are required to fuse a transaction yet cannot attributable be quickly linked or attributed to any biased work, disembodiment or service. There are two types of overheads absorbs, Unwandering overheads absorb and changeable overheads absorb. Fundamentals

    Variable expenses: The changeable expenses are troddenly linked to the origination process. The changeable absorb per part dregs regular. The entirety changeable absorb varies with the origination roll or disembodiment roll. These are considered as trodden absorbs which are appropriate ce the firmness-making process. Trodden esthetic per part, drudge absorb per part restrainteseeing. are the examples of changeable expenses.

    Unwandering expenses: Unwandering expenses are one-time expenses. Unwandering expenses do not attributable attributable attributable modify with the roll of origination disembodiment. Unwandering expenses run uniform when there is no production. Unwandering expenses sojourn regular throughout the origination process, irappertaining of the roll of origination disembodiment. Unwandering absorb per part varies with origination roll yet entirety unwandering absorb dregs constant. Depreciation, divulsion restrainteseeing. are the examples of unwandering expenses.

    Incremental Absorb: Incremental absorb refers to the acception in entirety absorb when there is an acception in origination disembodiment or any other disembodiment corrupt.

    Incremental Acquisition: The acception in acquisition by selling extra parts is termed as incremental acquisition.

    Relevant Absorb: The absorb that is kindred to biased firmness. A absorb cems to be appropriate absorb when it is biasedally runred on manipulation or origination of the appertaining work or else it is uncertain absorb. Show close First Tread | Whole Treads | Answer Only


    Tread 1 of 3

    Reckon the incremental fruits as shown below:


    Company has common a extraordinary direct of affixed parts of 15,000 at $3. Therefore, to reckon the incremental fruits, abstracted parts are multiplied with the figure.

    [Hint ce the contiguous tread]

    The contiguous tread is to detail the entirety origination absorb to effect affixed 15,000 parts.