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9. Ellis Television makes and sells portable televisions. Each television regularly sells for $250. The following cost data per television are based on full capacity
9. Ellis Television makes and sells portable televisions. Each television regularly sells for $250. The following cost data per television are based on full capacity of 10,000 televisions produced and sold each period. Direct materials.............................. $80 Direct labor.....................................$60 Factory overhead (70% variable)..........$40 Selling expenses (60%variable)......... $25 A customer in Scotland has offered Ellis $200 each for 2,000 televisions. The only selling costs that would be incurred on this special order would be $6 per television for shipping. Ellis currently is selling 9,000 televisions through regular channels each period; acceptance of the order thus would require giving up 1,000 units of regular sales. What effect would acceptance of the special order have on Ellis Television's operating income? $7,000 increase $52,000 increase $11,000 decrease $15,000 decrease
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