q28

Question 28 10 pts The Daffy D. Corporation has the capacity to produce 15,000 sacks each month. Current regular production and sales are 10,000 sacks per month at a selling price of $15 each. Based on this level of activity, the following unit costs are incurred: Direct materials $5.00 Direct labor cost $3.00 Variable manufacturing overhead $0.75 Fixed manufacturing overhead $1.50 Variable selling expense $0.25 Fixed administrative Expense $1.00 The Daffy D. Corporation has received a special order from a customer who wants to pay a reduced price of $10 per sack. There would be no selling expense in connection with this special order and this order would have no effect on the company's other sales. Suppose the special order is for 6,000 sacks this month and thus some regular sales would have to be given up. If this offer is accepted, what is the change in the company's operating income for the month? Be sure to present your calculations and analysis clearly. Edit View Insert Format Tools Table 12pt v Paragraph BI U Ave v 1