Sparrow Corporation Provided the Following Information Regarding Its One and Only

question 66

Multiple Choice

Sparrow Corporation provided the following information regarding its one and only product -tables: $\begin{array}{ll}\text { Selling price per unit } & \$ 50 \\\text { Direct materials used } & 150,000 \\\text { Direct labor } & 225,000 \\\text { Variable factory overhead } & 140,000 \\\text { Variable s elling and administrative } & 60,000\\\text { expenses }\\\text { Fixed factory overhead } & 330,000 \\\text { Fixed selling and adminis trative expenses } & 70,000 \\\text { Units produced and sold } & 20,000\end{array}$ Assuming there is excess capacity, the effect of accepting a special order for 1,000 units at a price of
$40) 00 per table is that:

• A) net income would decrease by $10,000
• B) net income would increase by $40,000
• C) net income would increase by $11,250
• D) net income would decrease by $28,750

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Definitions:

Chloropyridines

Organic compounds consisting of a pyridine ring substituted with one or more chlorine atoms.

NaCN

Sodium cyanide, a highly toxic salt used industrially in gold mining and as a reactant in organic synthesis, particularly for nitrile formation.

Tertiary Amine

A nitrogen-containing compound where the nitrogen atom is bonded to three carbon atoms, often used as a base or catalyst in organic synthesis.

Alkaloid

A group of naturally occurring chemical compounds that mostly contain basic nitrogen atoms, found in plants and are often used for their medicinal properties.