The Following Information Relates to a Product Produced by Creamer

question 21

Multiple Choice

The following information relates to a product produced by Creamer Company: Fixed selling costs are $500,000 per year,and variable selling costs are $12 per unit sold.Although production capacity is 600,000 units per year,the company expects to produce only 400,000 units next year.The product normally sells for $120 each.A customer has offered to buy 60,000 units for $90 each.
If the firm produces the special order,the effect on income would be a

• A)$360,000 increase.
• B)$360,000 decrease.
• C)$540,000 increase.
• D)$540,000 decrease.

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Definitions:

Unemployment Rate

Number of unemployed divided by the labor force.

Property Income

Income received by owners of property for the use of their property, such as rent.

Women

Female human beings, often referred to in contexts relating to gender-specific experiences, roles, rights, and social contributions.

Poverty Rate

The percentage of the population that lives below the national poverty line, indicating the proportion of individuals or families with income levels below what is necessary for basic living conditions.