Hubba Company Has a Current Production Capacity Level of 200,000

question 60

Multiple Choice

Hubba Company has a current production capacity level of 200,000 units per month.At this level of production, variable costs are $0.90 per unit and fixed costs are $0.50 per unit.Current monthly sales are 164,500 units.Bubba Company has contacted Hubba Company about purchasing 20,000 units at $2.00 each.Current sales would not be affected by the special order and no additional fixed costs would be incurred on the special order.If Hubba Company decides to accept the special order, Hubba Company's costs will increase by _____.

• A)$20,000
• B)$24,000
• C)$18,000
• D)$40,000

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