A Company Contemplating the Acceptance of a Special Order Has

question 55

Multiple Choice

A company contemplating the acceptance of a special order has the following unit cost behavior based on 10000 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 2000 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 $4000 in order to stamp the foreign company's name on the product.The incremental income (loss) from accepting the order is

• A)$6000.
• B)$2000.
• C)$(6000).
• D)$(2000).

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Definitions:

Fleet Repair Facility

A dedicated center for the maintenance and repair of a collection of vehicles, ensuring they remain operational and safe.

Utilization

The extent to which a resource, such as equipment or labor, is being used effectively, typically expressed as a percentage of total available capacity.

Efficiency

The ratio of the output generated to the input used, expressing the effectiveness of a system or process in utilizing resources.

Break Even

The point at which total revenues equal total costs, resulting in no profit or loss.