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The normal selling price of Daniel Companys product is $35 per unit. The costs of production are: direct materials, $6; direct labor, $5; variable overhead,
The normal selling price of Daniel Companys product is $35 per unit. The costs of production are: direct materials, $6; direct labor, $5; variable overhead, $5; and fixed overhead, $6 (based on normal capacity). The company has received a special order for 12,800 units at a unit sales price of $19. There is ample unused capacity to fill the order and $2 per unit will be incurred for additional packaging. If the order is accepted, operating income will
a. increase by $12,800
b. decrease by $38,400
c. increase by $38,400
d. decrease by $12,800
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