Element Boards Makes Skateboard Wheels The USA Skate Team Has Approached Element with a Special

question 14

Multiple Choice

Element Boards makes skateboard wheels.Budget information regarding current period operations reflecting the sale of 200,000 wheels appears below: $\begin{array}{lr}\text { Revenue }(200,000 \text { wheels at } \$ 3.00 \text { each) } & \$ 600,000 \\\text { Direct materials } & 120,000 \\\text { Direct labor } & 220,000 \\\text { Variable manufacturing overhead } & 50,000 \\\text { Fixed manufacturing overhead } & 70,000\end{array}$ The USA Skate Team has approached Element with a special order for 6,000 wheels at a price of $2.75 per wheel.Variable costs will be the same as the current production and accepting the special order will not have any impact on the rest of the company's orders.However, Element is operating at capacity and will incur an additional $5,000 in fixed manufacturing overhead if the order is accepted.What is the incremental revenue associated with accepting the special order?

• A)$616,500
• B)$200
• C)$16,700
• D)$16,500

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