Question
Tarazzz Company manufactures computers. The following cost information for the manufacture of one computer has been compiled. Direct materials $48 Direct labor 64 Variable manufacturing
Tarazzz Company manufactures computers. The following cost information for the manufacture of one computer has been compiled. Direct materials $48 Direct labor 64 Variable manufacturing overhead 40 *Fixed manufacturing overhead 48 Total cost per unit $200 *The $48 amount reflects the amount of indirect cost allocated to each unit. However, as indicated, the total of these indirect costs is fixed. Tarazzz has received a special order for 1,000 computers at a price of $150 per unit. By how much will overall company net income change if the order is accepted?
Company net income will INCREASE by $2,000 if the order is accepted.
Company net income will INCREASE by $50,000 if the order is accepted.
Company net income will DECREASE by $2,000 if the order is accepted.
Company net income will DECREASE by $50,000 if the order is accepted.
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