Plastic Pipe Company manufactures a variety of pipes, and has received a special one- time-only order from

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Plastic Pipe Company manufactures a variety of pipes, and has received a special one- time-only order from a new customer. Plastic Pipe has sufficient idle capacity to accept the special order to manufacture 2,000 16-foot lengths of pipe at a price of \($8.00\) per pipe. Plastic Pipe's normal selling price is \($12.00\) per 16-foot length. Variable manufacturing costs are \($7.00\) per pipe and fixed manufacturing costs are \($1.00\) per pipe. Plastic Pipe's variable selling expense for its normal line of pipes is \($0.50\) per pipe. What would the effect on Plastic Pipe's operating income be if the company accepted the special order?

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Managerial Accounting For Undergraduates

ISBN: 9780357499948

2nd Edition

Authors: James Wallace, Scott Hobson, Theodore Christensen

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