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It costs Orkid Company $17 of variable costs and $3 of fixed costs to produce its product. The company currently has unused capacity. The product sells for $25. Homer Industries offers to purchase 5,000 units at $19 each. In the deal, Orkid will incur special shipping costs of $1.50 per unit. If the special offer is accepted and produced with unused capacity, net income will:

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Arshavin023

Answer:

Net income = $-12500

Step-by-step explanation:

Net income = Total revenue - Total expenses

Total revenue = $95000

Total expenses = (17+3+1.5)(5000) = 107500

Net income = 95000 - 107500 = -12500

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