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Jeff's Widget Corporation produces and sells a part used in the production of bicycles. The unit costs associated with this part are as follows: Direct
Jeff's Widget Corporation produces and sells a part used in the production of bicycles. The unit costs associated with this part are as follows: Direct materials $0.14 Direct labor $0.30 Variable manufacturing overhead $0.20 Fixed manufacturing overhead $0.25 Total cost $0.89 The company's regular sales price is $1.25 per part. Saturn Company has approached Jeff's Widget Corporation with an offer to purchase 20,000 units of this part at a price of $.80. Accepting this special sales order will put idle manufacturing capacity to use and will not affect regular sales. Total fixed costs will not change. Answer the following questions: Question 1 2 pts What is the expected Increase in Revenue for this Special Order? Question 2 2 pts What is the expected Increase in total Variable Costs for this Special Order? Question 3 2 pts If the company accepts the order, what is the expected change in Operating Income for this Special Order? If your answer is a decrease, please enter a negative number. Question 4 2 pts What is the expected Increase in total Fixed Costs for this Special Order? Question 5 2 pts Should the company accept this Special Order? Why? Yes - the company's operating income will increase if this order is accepted. Yes - the company's operating income will decrease if this order is accepted. O No - the company's operating income will increase if this order is accepted. O No - the company's operating income will decrease if this order is accepted
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