Answer:
Results are below.
Explanation:
Giving the following information:
The variable cost is $100 per unit.
Wholesaler Y offers to buy 2,000 additional units at $120 per unit.
Wholesaler Z proposes to buy 1,500 additional units at $140 per unit.
We need to choose the best alternative, in this case, the one with the higher increase in income:
Effect on income= total contribution margin
Wholesaler Y:
Effect on income= 2,000*(120 - 100)= $40,000 increase
Wholesaler Z:
Effect on income= 1,500*(140 - 100)= $60,000 increase
The best option is to sell the units to Wholesaler Z. If Wholesaler Y accepts, you can still sell 500 more units.
