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The normal selling price of our product is $42 per unit. The costs of production are direct materials, $8; direct labor, $6; variable overhead, $7;
The normal selling price of our product is $42 per unit. The costs of production are direct materials, $8; direct labor, $6; variable overhead, $7; and fixed overhead, $4 (based on normal capacity). The company has received a special order for 14,200 units at a unit sales price of $23. There is ample unused capacity to fill the order and $1 per unit will be incurred for additional freight costs. If the order is accepted, operating income will A) decrease by $28,400. B) increase by $28,400. C) increase by $14,200. D) decrease by $42,600.
| The normal selling price of our product is $42 per unit. The costs of production are direct materials, $8; direct labor, $6; variable overhead, $7; and fixed overhead, $4 (based on normal capacity). The company has received a special order for 14,200 units at a unit sales price of $23. There is ample unused capacity to fill the order and $1 per unit will be incurred for additional freight costs. If the order is accepted, operating income will | |
| A) | decrease by $28,400. |
| B) | increase by $28,400. |
| C) | increase by $14,200. |
| D) | decrease by $42,600. |
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Integrated Accounting For Windows
Authors: Dale Klooster
7th Edition
0538747978, 9780538747974
