(Solved):Contreras Company has a capacity of 40,000 units per year and is currently selling all 40,000 for…

 

Question

Contreras Company has a capacity of 40,000 units per year and is currently selling all 40,000 for $400 each. Buerhle Company has approached Contreras about buying 2,000 units for only $300 each. The units would be packaged in bulk, saving Contreras $20 per unit when compared to the normal packaging cost. Normally, Contreras has a variable cost of $280 per unit. The annual fixed cost of $2,000,000 would be unaffected

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