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bluebird manufacturing has received a special one-time order for 15,800 bird feeders at $3.80 per unit. bluebird currently produces and sells 75,000 units at $7.80 each. this level represents 80% of its capacity. production costs for these units are $4.30 per unit, which includes $3.05 of variable costs and $2.05 of fixed costs. if the special offer is accepted, there will be no incremental fixed cost. if bluebird accepts this additional business, the effect on income will be:

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varshamittal029

The effect on income will be a increase of $11,850 in the net profit.

Costs incurred during the manufacture of a product are referred to as manufacturing costs. Direct material, direct labour, and manufacturing overhead expenditures are included in these expenses.

In the given question,

                            Units produced = 75,000 units

                            Capacity = 80%

                            Special Order = 15,800 units

                           Special Order Cost = $3.80 per unit

                            Variable Cost = $3.05 per unit

Therefore, Units to be produced at 100% capacity = 75,000 units/80%

                                                                                    = 93,750 units

If the Special Order is accepted, then total units = 15,800 + 75,000

                                                                                = 90,800 units

Incremental Income if the Special Order is accepted is calculated as follows:

                         Sales Revenue from Special Order = 15,800 * $3.80

                                                                                    = $60,040

                         Variable Costs = 15,800 * $3.05

                                                   = 48,190

                         Incremental Income = Sales Revenue – Variable Costs

                                                            = $60,040 - $48,190

                                                            = $11,850

Therefore, the income or net profit will increase by $11,850.

Learn more about Manufacturing Costs here: https://brainly.com/question/29038615

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