Rose Manufacturing Company Had the Following Unit Costs: a One-Time

question 128

Multiple Choice

Rose Manufacturing Company had the following unit costs: A one-time customer has offered to buy 2,000 units at a special price of $48 per unit.Assuming that sufficient unused production capacity exists to produce the order and no regular customers will be affected by the order,how much additional profit or loss will be generated by accepting the special order?

• A)$12,000 profit
• B)$96,000 profit
• C)$84,000 loss
• D)$24,000 loss

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.

Selling Price

The amount of money charged for a product or service offered to customers.

Absorption Costing

A method of accounting for costs in which all costs of manufacturing a product, including both fixed and variable costs, are considered product costs.