Question
The Molis Corporation has the capacity to produce 15,000 hats each month. Current regular production and sales are 10,000 hats per month at a selling
The Molis Corporation has the capacity to produce 15,000 hats each month. Current regular production and sales are 10,000 hats per month at a selling price of $15 each. Based on this level of activity, the following unit costs are incurred: Per Unit Direct Material $5.00 Direct Labor $3.00 Variable manufacturing overhead $0.75 Fixed manufacturing overhead $1.05 Variable selling expenses $0.75 Fixed SG&A expense Unit product cost $1.00 $12.00 The Molis Corporation has received a special order from a customer who wants to pay a reduced price of $9 per hat. 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 4,000 hats this month. If this offer is accepted by Molis, what is the impact on the company's operating income
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