A Company Contemplating the Acceptance of a Special Order Has

question 156

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:

Physical Arousal

Refers to the body's physiological response to stimuli, which can involve increased heart rate, sweating, or heightened senses.

Two-Factor Theory Of Emotion

A psychological model proposing that emotions are a result of physiological arousal and the interpretation of that arousal.

Social Exchange Theory

A conceptual framework suggesting that social behavior is the result of an exchange process to maximize benefits and minimize costs to oneself.

Warm Glow Of Affection

A pleasant feeling of emotional warmth and closeness towards someone or something.