Pluto Incorporated Provided the Following Information Regarding Its Single Product

question 58

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 1,000 units at a sale price of $40 per product? The special order units would not require any variable selling and administrative expenses.

• A)Decrease by $18,000
• B)Decrease by $19,500
• C)Increase by $18,000
• D)Increase by $19,500

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Definitions:

Paraphrase

The act of rewording or rephrasing a text or statement to clarify its meaning, often to achieve greater understanding.

Reflect

The act of thinking deeply or carefully about certain thoughts, experiences, or teachings to gain insights or understanding.

Shape

The external form, contours, or outline of an object or figure.

Psychological Techniques

Methods used in psychology to understand, diagnose, and treat mental health issues, including various forms of therapy and assessment tools.