Question

Stryker Industries received an offer from an exporter for 22,000 units of product at $17 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available: Domestic unit sales price $24 Unit manufacturing costs: Variable 11 Fixed 4 What is the amount of income or loss from acceptance of the offer?

Answer 1

132,000

Explanation:

The computation of the amount of income or loss is shown below:

= (Offer price - variable cost per unit) × number of units of production

= ($17 - $11) × 22,000

= $6 × 22,000

= $132,000

We do not considered the fixed cost and the domestic unit sales as it is not relevant for the computation part. Hence, ignored it

Offer price - variable cost per unit shows the gain per unit arise