Pluto Incorporated Provided the Following Information Regarding Its Single Product

question 33

Multiple Choice

Pluto Incorporated provided the following information regarding its single product: The regular selling price for the product is $80. The annual quantity of units produced and sold is 40,000 units (the costs above relate to the 40,000 units production level) . The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory.
What would be the effect on operating income of accepting a special order for 1,500 units at a sale price of $50 per product assuming additional fixed manufacturing overhead costs of $10,000 are incurred?

• A)Decrease by $42,000
• B)Decrease by $32,000
• C)Increase by $32,000
• D)Increase by $42,000

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Definitions:

Catharsis

A release of tension or anxiety.

Delivered Shocks

In psychological experiments, a method used to assess obedience or aggression where participants are instructed to administer electric shocks to others.

Subjected To Frustration

The state of experiencing obstacles that prevent an individual from achieving desired goals, leading to feelings of dissatisfaction or stress.

Innocent Stranger

A concept or figure often used in literature and psychology to represent purity, naivety, or someone unaffected by corruption or moral blemishes.