Relay Corporation Manufactures Batons

question 56

Multiple Choice

Relay Corporation manufactures batons. Relay can manufacture 300,000 batons a year at a variable cost of $750,000 and a fixed cost of $450,000. Based on Relay's predictions for next year, 240,000 batons will be sold at the regular price of $5.00 each. In addition, a special order was placed for 60,000 batons to be sold at a 40% discount off the regular price. Total fixed costs would be unaffected by this order. By what amount would the company's net operating income be increased or decreased as a result of the special order?

• A)$180,000 increase.
• B)$30,000 increase.
• C)$36,000 increase.
• D)$60,000 decrease.

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Definitions:

Language Tasks

Activities designed to engage language skills, including speaking, listening, reading, and writing, aimed at improving language comprehension and use.

Right Brain

The hemisphere of the brain that is associated with creative thought, intuition, and artistic abilities, contrasting with the left brain's analytical and logical reasoning.

Left Brain

Relates to the hemisphere of the brain that is typically associated with analytical, logical, and language tasks.

Specialised

Refers to a focus or concentration on a particular area of knowledge or activity, often indicating expertise.