Question
Gecko Industries produced and sold 12,000 units last (the company's current capacity) and reported the following costs: Direct materials $12,000 Direct labour 24,000 Variable manufacturing
Gecko Industries produced and sold 12,000 units last (the company's current capacity) and reported the following costs:
Direct materials | $12,000 |
Direct labour | 24,000 |
Variable manufacturing overhead | 6,000 |
Fixed manufacturing overhead | 5,000 |
Variable selling and administration | 24,000 |
Fixed selling and administration | 9,000 |
Current sales are 850 units per month. A special order has been received for 100 units to be completed in the following month. One-half of the variable selling and administration costs would apply to the special order units if the order is accepted. By how much will Gecko's operating income change if it prices the 100 special order units at $9 each?
Select answer from the options below
A) $350 increase
B) $233 increase
C) $333 increase
D) $450 increase
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