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Elhard Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of
Elhard Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of units per month is as follows:
Direct materials
$
Direct labor
$
Variable manufacturing overhead
$
Fixed manufacturing overhead.
$
Variable selling & administrative expense
$
Fixed selling & administrative expense
$
The normal selling price of the product is $ per unit. An order has been received from an overseas customer for units to be delivered this month at a special discounted price of $ per unit. This order would have no effect on the company's total amount of fixed costs. However, the variable selling and administrative expense would be $ less per unit on this
order than on normal sales. The company would also incur an extra $ to deliver the products to the overseas customer.
By how much would total company profits increase or decrease if they accept the special order and what should they do
A Reject because profits will decrease by $
B Reject because profits will decrease by $
C Accept because profits will increase by $
D Accept because profits will increase by $
E Accept because profits will increase by $
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