Apex Company Produces Artificial Christmas Trees

question 87

Multiple Choice

Apex Company produces artificial Christmas trees.A local shopping mall recently made a special order offer;the shopping mall would like to purchase 200 extra-large white trees.Apex Company is currently producing and selling 20,000 trees;the company has the excess capacity to handle this special order.The shopping mall has offered to pay $120 for each tree.An accountant at Apex Company provides an estimate of the unit product cost as follows:

This special order would require an investment of $10,000 for the molds required for the extra-large trees.These molds would have no other purpose and would have no salvage value.The special order trees would also have an additional variable cost of $5.00 per unit associated with having a white tree.This special order would not have any effect on the company's other sales.If the special order is accepted,the company's operating income would increase (decrease) by

• A)$2,300 decrease.
• B)$13,100 decrease.
• C)$2,100 increase.
• D)$13,100 increase.

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Definitions:

Union

In mathematics, specifically in set theory, the union of a collection of sets is the set of all distinct elements that are in any of those sets.

Intersection

A mathematical term describing the point or set of points where two lines, curves, shapes, or surfaces meet.

Event

A collection of sample points.

Past Due Accounts

Accounts that have not been settled or paid by their due date.