Question
Wright Corporation's contribution format income statement for last month appears below: Sales $45,000 Less: variable expenses 30,000 Contribution margin 15,000 Less: fixed expenses 9,000 Operating
Wright Corporation's contribution format income statement for last month appears below:
Sales | $45,000 |
Less: variable expenses | 30,000 |
Contribution margin | 15,000 |
Less: fixed expenses | 9,000 |
Operating income | $6,000 |
There was no beginning or ending inventories. The company produced and sold 3,000 units during the month.
The company has an opportunity to secure a special order of 800 units if it is willing to drop the selling price on these units to $13. Costs of securing the special order would be $1,000. The special order would not affect the company's regular sales. If the special order is accepted, what will be the impact on the company's overall operating income?
Multiple Choice
1) Increase $3,800.
2) Increase $1,400.
3) Increase $3,200.
3) Remain the same.
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