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

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Definitions:

Active Continental Rift

A region where a continent is actively being stretched and thinned, often leading to the formation of new crust and the potential for volcanic activity.

Accompanying Map

A map that is provided alongside another document or data set, offering spatial context.

Plate Boundaries

The edges where two or more tectonic plates meet, often associated with geological events such as earthquakes and volcanic activity.

Plate Boundaries

Plate boundaries are the edges where two or more tectonic plates meet, which are characterized by seismic activity and are locations where earthquakes, volcanic eruptions, and mountain-building occur.