Special order multiple choice. Aggie.com. Inc., which produces and ships frozen meals, has the plant capacity
Question:
Special order — multiple choice. Aggie.com. Inc., which produces and ships frozen meals, has the plant capacity to produce 10,000 units annually. Its predicted operations for the year follow:
Aggie.com is considering a special order of 1,000 units from a prospective customer willing to pay $8 per unit. Assume this order will have no effect on regular sales at regular prices, on total fixed costs, or on variable costs per unit.
a. The effect of the special order on sales will be an increase of (1) $10,000.
(2) $72,000.
(3) $80,000.
(4) $8,000.
(5) Some-other amount.
b. The effect of the special order on total variable costs will be an increase of (1) $8,000.
(2) $6,000.
(3) $5,000.
(4) $4,000.
(5) Some other amount.
c. The effect of the special order on total fixed costs will be an increase of (1) $0.
(2) $2,250.
(3) $8,000.
(4) $1,250.
(5) Some other amount.
d. The effect of the special order on fixed costs per unit will be (1) Zero.
(2) An increase of $2.25.
(3) A decrease of $2.25.
(4) A decrease of some other amount.
(5) An increase of some other amount.
e. How will the special order affect operating profit?
(1) Increase it.
(2) Decrease it.
(3) Have no effect.
Step by Step Answer:
Managerial Accounting An Introduction To Concepts Methods And Uses
ISBN: 9780030259630
7th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil, Sidney Davidson