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Jaws Inc. currently sells 40,000 dental tools to its regular customers but it has a capacity to produce 50,000 tools Its product sells for $30
Jaws Inc. currently sells 40,000 dental tools to its regular customers but it has a capacity to produce 50,000 tools Its product sells for $30 per tool and the variable costs incurred are as follows on a per tool basis Direct materials Direct labour Sales commission $7 S6 $1 A customer has proposed a special order to purchase 10,000 tools at a lower selling price. If Jaws accepts the order the company will not have to pay its sales personnel their sales commissions However, the company will incur a shipping cost of $3 per tool. If Jaws accepts the order at a special price of $20 per tool, how would operating Income be affected? Mutuple Choice decrease by $30.000 Operating income is not affected decrease by 5120,000 increase by $50,000 Increase by 540,000
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