Thursday
August 28, 2014

Homework Help: accounting

Posted by John on Saturday, March 14, 2009 at 10:11pm.

Incremental Analysis question:

I know the answer is $4.20, but I can't figure out why.

Sandusky Inc. has the following costs when producing 100,000 units:

Variable costs $400,000
Fixed costs 600,000

An outside supplier is interested in producing the item for Sandusky. If the item is produced outside, Sandusky could use the released production facilities to make another item that would generate $100,000 of net income. At what unit price would Sandusky accept the outside supplier’s offer if Sandusky wanted to increase net income by $80,000?

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