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11 D) S9.375 per pound 11. Jay Company budgeted sales of 400,000 humidifiers at the price of $40 per unit last year. Variable manufacturing costs
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D) S9.375 per pound 11. Jay Company budgeted sales of 400,000 humidifiers at the price of $40 per unit last year. Variable manufacturing costs were budgeted at $17 per unit, and fixed manufacturing costs were budgeted at $12 per unit. A special order for 40,000 humidifiers at the price of $25 each was received by Jay in March. Jay has sufficient plant capacity to manufacture the additional quantity without incurring any additional fixed manufacturing costs; however, the production would have to be done on an overtime basis at an estimated additional variable cost of $4 per humidifier. Acceptance of the special order would not affect Jay's normal sales. What would be the effect on net operating income if the special order were accepted? A) $320,000 decrease B) S160,000 decrease C) $160,000 increase D) $320,000 increaseStep by Step Solution
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