Wallyworld Company Manufactures a Product with the Following Costs Per

question 48

Multiple Choice

Wallyworld Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: $$\begin{array} { l l } \text { Direct materials } & \$ 12 \\\text { Direct labor } & 36 \\\text { Variable manufacturing overhead } & 18 \\\text { Fixed manufacturing overhead } & 24\end{array}$$ The company has the capacity to produce 90,000 units. The product regularly sells for $120. A wholesaler has offered to pay $110 a unit for 7,500 units.
If the special order is accepted, the effect on operating income would be a

• A)$75,000 decrease.
• B)$429,000 increase.
• C)$249,000 increase.
• D)$495,000 increase.

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