Wannabee Company Manufactures a Product with the Following Costs Per

question 32

Multiple Choice

Wannabee Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: $$\begin{array} { l r } \text { Direct materials } & \$ 12 \\\text { Direct labor } & 36 \\\text { Variable manufacturing overhead } & 18 \\\text { Fixed manufacturing overhead } & 24\end{array}$$ 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)$249,000 increase.
• B)$429,000 increase.
• C)$495,000 increase.
• D)$75,000 decrease.

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Definitions:

Decision-Making

The cognitive process of selecting a course of action among multiple alternatives.

Controversy

A prolonged public dispute or debate marked by differences in opinion or strongly opposing views.

Press Freedom

The principle that communication and expression through various media, including print and electronic, should be considered a right to be exercised freely.

Ferdinand Tönnies

A German sociologist known for his analysis of social groups and the distinction between community (Gemeinschaft) and society (Gesellschaft).