Falcon Co. produces a single product. Its normal selling price is $30 per unit. The variable costs are $16 per unit. Fixed costs are $22,700 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,440 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, what would be the impact on net income? a. increase of $5,360.
b. decrease of $3,216.
c. increase of $4,288.
d. increase of $6,968.

See below

Explanation:

Since we were given that the variable costs are $16 and for special order, $2 per unit will be eliminated.

Revised variable cost = $16 - $2 = $14 per unit

Normal selling price = $30 per unit

We can then calculate the profit per unit by considering the special price per unit and revised variable cost per unit

Profit per unit = Special price per unit - revised variable cost per unit

= $19 - $14

= $5 per unit

Also for 1,440 units, the special order is placed, hence would increase the net income by:

= Special order units × Profits

= 1,440 × $5

= $7,200

If the order is accepted, the net income is increased by $7,200

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.