Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Bluebird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. These bird feeders would be marketed under the wholesaler's name and would not affect Bluebird's sales through its normal channels. Production costs for these units are $3.50 per unit, which includes $2.25 variable cost and $1.25 fixed cost. If Bluebird accepts this additional business, the incremental revenue will be:
A) $45,000.
B) $11,250.
C) $33,750.
D) $7,500.
E) $52,500.

Question

Quizplus · Accepted Answer

The incremental revenue is calculated by multiplying the number of additional units (15,000) by the price per unit ($3), resulting in $45,000.