What type of spending depends primarily on these three factors: the interest rate, the expected future level of real GDP, and th
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Answer:
The offer shall be accepted.
Explanation:
Provided details, we have
Monthly capacity of production = 10,000 widgets
Actual production = 9,000 units
Where average cost per unit = $5
therefore total cost = 9,000 $5 = $45,000
Fixed cost = $18,000
Variable cost = $45,000 - $18,000 = $27,000
Variable cost per unit = $27,000/9,000 = $3 per unit.
Now even if additional 1,000 units will be produced the cost will increase by 1,000 $3 = $3,000.
No additional fixed cost will be incurred.
Since buying price is $4 per unit, thus,
Increase in revenue from such sale = $4 - $3 = $1 per unit for 1,000 units = $1,000.
Thus, the offer shall be accepted.