Question
Twisty Pretzel Company produces bags of pretzels that are sold in cases and retailed throughout the United States. Its normal selling price is $30 per
Twisty Pretzel Company produces bags of pretzels that are sold in cases and retailed throughout the United States. Its normal selling price is $30 per case; each case contains 15 bags of pretzels. The variable costs are $19 per case. Fixed costs are $25,000 for a normal production run of 5,000 cases per month. Twisty Pretzel received a special order from an existing customer which it could accommodate without exceeding capacity. The order was for 1,500 units at a special price of $20 per case; a variable selling cost of $1 per case included in the variable costs would not be relevant for this order. If the order is accepted, the impact on operating income would be a(n) ________.
decrease of $750
decrease of $4,500
increase of $1,500
increase of $3,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started