The Immanuel Company Has Just Obtained a Request for a Special

question 4

Multiple Choice

The Immanuel Company has just obtained a request for a special order of 6,000 jigs to be shipped at the end of the month at a selling price of $7 each. The company has a production capacity of 90,000 jigs per month with total fixed production costs of $144,000. At present, the company is selling 80,000 jigs per month through regular channels at a selling price of $11 each. For these regular sales, the cost for one jig is: $\begin{array}{|l|r|}\hline \text { Variable Production Cost } & \$ 4.60 \\\hline \text { Fixed Production Cost } & \$ 1.80 \\\hline \text { Variable Selling Expense } & \$ 1.00 \\\hline\end{array}$
If the special order is accepted, Immanuel will not incur any selling expense; however, it will incur shipping costs of $\$ 0.30$ per unit.
-Suppose that total regular sales of jigs are 85,000 units per month,and all other conditions remain the same.If Immanuel accepts the special order,what will be the change in monthly operating income?

• A) $3,600 decrease.
• B) $5,400 decrease.
• C) $7,200 increase.
• D) $14,000 increase.

Recognize the importance of goal orientation in personality psychology.

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Comprehend the requirements and timing for key prenatal tests such as amniocentesis.

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Definitions:

Future Interest Rates

An indication of what the cost of borrowing money or the rate of return on investments will be at a future date.

Callable Bonds

Bonds that give the issuer the right to redeem them before their maturity date at a pre-specified price.

Bond Indenture

The underlying contract between the company issuing bonds and the bondholders.

Bond Premium

The additional amount over the face value for which a bond is sold, representing the difference between the bond's issue price and its nominal value.