Use the Following Information for the Next 3 Questions

question 63

Multiple Choice

Use the following information for the next 3 questions.
Taylor Enterprises sells its product for $40 per unit. Taylor recently received a special order from a customer for 20,000 units. Production costs per unit for regular sales are:
-Suppose that the special order price is $600,000 for all 20,000 units, but there is not sufficient capacity to fill the order; 8,000 units of regular business will be replaced by the special order if it is accepted. Should Taylor accept the special order and why?

• A) No, because profits will decrease by $56,000
• B) Yes, because profits will increase by $40,000
• C) No, because profits will decrease by $24,000
• D) No, because profits will decrease by $280,000

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Definitions:

Adjust Salaries

The process of modifying the amount of wages or salaries paid to employees, which may be done for reasons such as performance appraisals or inflation adjustments.

Liabilities

Liabilities are financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits.

Assets

Assets belonging to a company or person, anticipated to yield benefits in the future.

Adjusting Entries

Adjusting entries are journal entries made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.