Accent Furniture Has a Capacity of 30,000 Desk Chairs Per

question 102

Multiple Choice

Accent Furniture has a capacity of 30,000 desk chairs per year and is currently selling all 20,000 for $240 each.Country Bank has approached Accent with an offer to buy 800 chairs for only $210 each.Accent has a normal variable cost of $165 per chair, including $50 per unit in direct labor per chair.Accent can produce the special order on an overtime shift.This would result in direct labor being paid overtime at 150% of the normal pay rate.The annual fixed costs will be unaffected by the special order and it will not affect any of its other operations.What will be the impact on profit of accepting the order?

• A)Profit will decrease by $24,000.
• B)Profit will increase by $16,000.
• C)Profit will increase by $36,000.
• D)Profit will decrease by $4,000.

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Definitions:

Annual Dividend

The total amount of dividend payments made to shareholders in a year, often expressed as a per-share amount.

Yield of The Stock

The income return on an investment, such as dividends received from holding a stock, expressed usually as a percentage of the stock's current market price.

Limit Order

Instructions to the broker that name a specific price for a share of stock.

Percent Change

The rate at which a quantity increases or decreases compared to its original value, expressed as a percentage.