The Following Information Relates to a Product Produced by Creamer

question 71

Multiple Choice

The following information relates to a product produced by Creamer Company:
$\begin{array}{lr}\text { Direct materials } & \$ 24 \\\text { Direct labour } & 15 \\\text { Variable overhead } & 30 \\\text { Fixed overhead } & 18 \\\text { Unit cost } & \$ 87\end{array}$
Fixed selling costs are $500,000 per year,and variable selling costs are $12 per unit sold.Although production capacity is 600,000 units per year,the company expects to produce only 400,000 units next year.The product normally sells for $120 each.A customer has offered to buy 60,000 units for $90 each.
If the firm produces the special order,what would be the effect on income?

• A)$360,000 increase
• B)$360,000 decrease
• C)$540,000 increase
• D)$540,000 decrease

---

Definitions:

Chest Circumference

A measurement around the largest part of the chest, used in medical assessments to evaluate growth and respiratory health.

Head Measurement

The process of measuring the circumference of a person's head, often used in medical settings to assess growth in infants and children.

Tripod Position

A body position often adopted by individuals in respiratory distress, where they sit upright while leaning forward on extended arms, helping to reduce breathing effort.

Respiratory Difficulties

Any condition or symptom that leads to problems with breathing, including diseases of the airways and lungs.