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)$26,250.

Question

Quizplus · Accepted Answer

The incremental revenue from the special order is calculated by multiplying the number of units in the special order (15,000) by the price per unit ($3). Therefore, the incremental revenue is 15,000 units * $3/unit = $45,000.