Use the following to answer questions
Knockdown Products normally sells boxing gloves for $85 a pair. Knockdown just received a special order for 1,500 pair at a price of $50 a pair. To purchase, store, and ship the gloves, it costs a total of $55 a pair, which consists of $43 in variable costs and $12 in fixed costs.
-Assuming Knockdown has no way of purchasing any additional gloves,and,that accepting this order will mean losing an equivalent quantity of sales to regular customers,Knockdown should:
A) reject the offer since income will decrease by $7,500
B) accept the offer since income will increase by $7,500
C) reject the offer since income will decrease by $52,500
D) accept the offer since income will increase by $52,500
Correct Answer:
Verified
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