Question
Jade Ltd. manufactures a product, which regularly sells for $67. This product has the following costs per unit at the expected production of 48638 units:
Jade Ltd. manufactures a product, which regularly sells for $67. This product has the following costs per unit at the expected production of 48638 units:
| Direct labour | $17 |
| Direct materials | 10 |
| Manufacturing overhead (42% is variable) | 24 |
The company has the capacity to produce 52621 units. A wholesaler has offered to pay $58 for 12057 units.
If Jade Ltd. accepts this special order, operating income would increase (decrease) by:
Select one:
a. $10658
b. $-44785
c. $84399
d. $252232
The Grover Corporation manufactures a product that it sells for $72.65. The variable costs are $41.53 and the annual fixed costs are $1219333. Grovers capacity is 115298 units per year but is currently only selling 57283 units per year. This is not expected to change in the future.
Grover was approached to provide 30828 units as a one-time order for a price of $48.91 per unit. If Grover accepts the special order, what will be the impact on operating income?
Select one:
a. $227511
b. $-199106
c. $731857
d. $1507797
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