Minor Electric Has Received a Special One-Time Order for 1,500

question 112

Multiple Choice

Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $5 per unit.Minor currently produces and sells 7,500 units at $6.00 each.This level represents 75% of its capacity.Production costs for these units are $4.50 per unit,which includes $3.00 variable cost and $1.50 fixed cost.To produce the special order,a new machine needs to be purchased at a cost of $1,000 with a zero salvage value.Management expects no other changes in costs as a result of the additional production.Should the company accept the special order?

• A)No,because additional production would exceed capacity.
• B)No,because incremental costs exceed incremental revenue.
• C)Yes,because incremental revenue exceeds incremental costs.
• D)Yes,because incremental costs exceed incremental revenues.
• E)No,because the incremental revenue is too low.

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Definitions:

Unconscious Processes

Mental activities beyond conscious awareness, influencing thoughts, feelings, and behaviors without our direct knowledge.

Cognitive Perspective

A psychological approach that emphasizes internal mental processes such as perception, memory, and problem-solving.

Inborn Behavior

Behaviors that are present from birth, not learned through experience.

B. F. Skinner

An American psychologist known for his work in behaviorism and the development of the theory of operant conditioning.