A Company Contemplating the Acceptance of a Special Order Has

question 123

Multiple Choice

A company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units: $$\begin{array} { l r } \text { Direct materials } & \$ 4 \\\text { Direct labor } & 10 \\\text { Variable overhead } & 8 \\\text { Fixed overhead } & 6\end{array}$$ A foreign company wants to purchase 2,000 units at a special unit price of $25.The normal price per unit is $40.In addition, a special stamping machine will have to be purchased for $4,000 in order to stamp the foreign company's name on the product.The incremental income (loss) from accepting the order is

• A)$6,000.
• B)$2,000.
• C)$(6,000).
• D)$(2,000).

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Definitions:

Executive Summary

A brief section at the beginning of a business plan, document, or report, summarizing the main points and providing a comprehensive overview to readers.

Business Plan

A formal document detailing a business's goals, strategies, target market, and financial forecasts, serving as a roadmap for business development.

Entrepreneur

An individual who initiates, organizes, and operates a business venture, taking on greater than normal financial risks in order to do so.

Operations Plan

A strategic guide outlining the production or service delivery activities of a company, detailing processes, resources, and timelines.