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ACME Incorporated has just obtained a request for a special order of 6,000 jigs to be shipped at the end of the month at a
ACME Incorporated has just obtained a request for a special order of 6,000 jigs to be shipped at the end of the month at a selling price of $7 each. The company has a production capacity of 90,000 jigs per month with total fixed production costs of $144,000. The company is currently selling through regular channels at a selling price of $11 each; the cost for one jig is: Variable Production Cost $4.60 Fixed Production Cost $1.80 Variable Selling Expense $1.00 If the special order is accepted, ACME will not incur any selling expense; however, it will incur shipping costs of $0.30 per unit. Required: If ACME accepts this special order, what will be the total increase in operating income? (4 marks)
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