Falcon Co Produces a Single Product

question 14

Multiple Choice

Falcon Co. produces a single product. Its normal selling price is $30.00 per unit. The variable costs are $19.00 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20.00 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1.00 per unit would be eliminated.
If the order is accepted, what would be the impact on net income?

• A) decrease of $750
• B) decrease of $4,500
• C) increase of $3,000
• D) increase of $1,500

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Definitions:

Involuntary Part-time Workers

Individuals who are working fewer hours than they desire or need, due to circumstances such as an inability to find full-time employment or cuts in work hours by their employer.

Previously Retired

Refers to individuals who had exited the workforce upon reaching the age or conditions for retirement but may have returned to work or active professional life.

Part-time Employees

Workers who are employed for fewer hours than those considered full-time, often with less stability and fewer benefits.

Deskilling Thesis

The argument that technological advancements and organizational changes result in the reduction of the skill level required for jobs, leading to a devaluation of workers' expertise and autonomy.