Blue Technologies Manufactures and Sells DVD Players

question 43

Multiple Choice

Blue Technologies manufactures and sells DVD players.Great Products Company has offered Blue Technologies $22 per DVD player for 10,000 DVD players.Blue Technologies' normal selling price is $30 per DVD player.The total manufacturing cost per DVD player is $18 and consists of variable costs of $14 per DVD player and fixed overhead costs of $4 per DVD player.(NOTE: Assume excess capacity and no effect on regular sales. )
Should Blue Technologies accept or reject the special sales order?

• A)Accept,because operating income would increase $360,000.
• B)Reject,because operating income would decrease $80,000.
• C)Accept,because operating income would increase $80,000.
• D)Reject,because operating income would decrease $160,000.

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Definitions:

Misleading Information

False or inaccurate information that leads someone to believe something that is not true, often relevant in consumer protection and securities law.

1933 Act

Refers to the Securities Act of 1933, a U.S. legislation enacted to ensure more transparency in financial statements and to establish laws against misrepresentation and fraudulent activities in the securities markets.

Registration

The process of recording information, typically related to a person, company, or property, in an official or regulatory database.

Sarbanes-Oxley Act

A U.S. law enacted to protect investors by making corporate disclosures more reliable and accurate following the Enron and WorldCom financial scandals.