Noreaster Company Produces a Product That Has a Regular Selling

question 80

Multiple Choice

Noreaster Company produces a product that has a regular selling price of $360 per unit. At a typical monthly production volume of 2,000 units, the product's average unit cost of goods sold amounts to $270. Included in this average is $120,000 of fixed manufacturing costs. All selling and administrative costs are fixed and amount to $30,000 per month.
Noreaster Company has just received a special order for 1,000 units at $240 per unit. The buyer will pay transportation, and the regular selling price will not be affected if Noreaster accepts the order.
Assuming Noreaster Company has excess capacity, the effect on profits of accepting the order would be a

• A)$30,000 increase.
• B)$30,000 decrease
• C)$60,000 increase.
• D)$60,000 decrease..

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Definitions:

Labor Advocates

Individuals or groups that actively support and promote the rights and interests of workers and labor unions.

Business Environment

The combination of external and internal factors that influence a company's operating situation, including economic, legal, political, and social conditions.

High-Quality Goods

Products that meet or exceed customer expectations in terms of durability, reliability, and performance.

Sophistication Of Technology

The level of advanced and complex technological development or application.