Answered

Required:

1. What is the financial advantage (disadvantage) of accepting the special order?
2. As a separate matter from the special order, assume the company's inventory includes 1,000 units that are of inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units?

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Complete this question by entering your answers in the tabs below:

Required 1:
What is the financial advantage (disadvantage) of accepting the special order?

Financial advantage:
$ _______

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Required 2:
What unit cost is relevant for establishing a minimum selling price for the inferior units?



Answer :

GinnyAnswer

Final answer:

The financial advantage of accepting the special order is [tex]$1,000. The relevant unit cost for establishing a minimum selling price for the inferior units is the variable cost per unit.


Explanation:

Financial Advantage: The financial advantage of accepting the special order is $[/tex]1,000.

Relevant unit cost: When establishing a minimum selling price for inferior units, the relevant unit cost would be the variable cost per unit, as fixed costs remain constant and should be covered by regular sales.


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