Figure 9-6
the Following Information Relates to a Product Produced

question 73

Multiple Choice

Figure 9-6
The following information relates to a product produced by Creamer Company: $\begin{array}{lr}\text { Direct materials } & £ 24 \\\text { Direct labour } & 15 \\\text { Variable overhead } & 30 \\\text { Fixed overhead } & {18} \\\text { Unit cost } & £87\end{array}$ Fixed selling costs are £500,000 per year, and variable selling costs are £12 per unit sold. Although production capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for £120 each. A customer has offered to buy 60,000 units for £90 each.
-Refer to Figure 9-6. If the firm produces the special order, the effect on income would be a

• A)£360,000 increase.
• B)£360,000 decrease.
• C)£540,000 increase.
• D)£540,000 decrease.

---

Definitions:

Professional Bureaucracy

An organizational structure characterized by a high degree of specialization and professional autonomy, often found in institutions like hospitals and universities.

Machine Bureaucracy

A highly structured form of organization characterized by a high degree of formalization and standardization, making operations predictable and efficient.

Central Management Direction

highlights a leadership approach where central figures or bodies within an organization dictate policies and strategies, streamlining decision-making processes.

Formal Structures

The officially designated channels of communication and division of responsibilities within an organization.