Question
Crane Industries manufactures and bottles energy drinks. Last year, the company made and bottled 2524000 units. Crane has the capacity to manufacture and bottle 3024000
Crane Industries manufactures and bottles energy drinks. Last year, the company made and bottled 2524000 units. Crane has the capacity to manufacture and bottle 3024000 units per year. Crane has received a special offer from a grocery chain for 524000 bottles with a special label to be sold as the house brand energy drink. Cranes normal selling price is $0.80 per bottle. The special offer is for $377280 total ($0.72/bottle). Management estimates that the variable cost per bottle is $0.34; fixed manufacturing overhead is $0.22/bottle. Of the fixed costs assigned to this special order, $2500 is for the special labels, the remainder is attributable to costs that will be incurred regardless of whether the special order is produced. What is the operating income generated by the special order?
$196620
$81340
$199120
$83840
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