Bluebird Manufacturing has received a special one-time order for 15,000 bird feeders at $3.00 per unit. Bluebird currently produces and sells 75,000 units at $7.00 each.

Bluebird Manufacturing has received a special one-time order for 15,000 bird feeders at $3.00 per unit. Bluebird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. Production costs for these units are $3.50 per unit, which includes $2.25 of variable costs and $1.25 of fixed costs. If the special offer is accepted, there will be no incremental fixed cost. If Bluebird accepts this additional business, the incremental revenue will be:

Multiple Choice

$33,750.


$11,250.


$45,000. Correct

$7,500.


$33,750.

Explanation
Incremental revenue (15,000 feeders × $3) = $45,000