Question
Northern Glass Manufacturing has a current production level of 200,000 glass jars per month. Unit costs at this level are: Direct materials $0.345 Direct labour
Northern Glass Manufacturing has a current production level of 200,000 glass jars per month. Unit costs at this level are:
Direct materials | $0.345 |
Direct labour | 0.400 |
Variable overhead | 0.175 |
Fixed overhead | 0.100 |
Marketing minus Fixed | 0.100 |
Marketing/distribution minus Variable | 0.200 |
Current monthly sales are 180,000 units. Canadian Hardware Ltd. has contacted Northern Glass Manufacturing about purchasing 15,000 units at $1.00 each. Current sales would not be affected by the special order, and variable marketing/ distributing costs would not be incurred on the special order.
What is NorthernGlass' change in profits if the order is accepted?
A. $4,800 increase B. $1,200 increase C. $300 decrease D. $4,800 decrease E. $1,800 decrease
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