Question
Special Order Plastic Pipe Company manufactures a variety of pipes, and has received a special one-time-only order from a new customer. Plastic Pipe has sufficient
Special Order Plastic Pipe Company manufactures a variety of pipes, and has received a special one-time-only order from a new customer. Plastic Pipe has sufficient idle capacity to accept the special order to manufacture 2,000 16-foot lengths of pipe at a price of $8.00 per pipe. Plastic Pipes normal selling price is $12.00 per 16-foot length. Variable manufacturing costs are $7.00 per pipe and fixed manufacturing costs are $1.00 per pipe. Plastic Pipes variable selling expense for its normal line of pipes is $0.50 per pipe. What would the effect on Plastic Pipes operating income be if the company accepted the special order? Plastic Pipe's operating income would Answer by $Answer if the order was accepted.
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