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Widget Inc. manufactures widgets. The company has the capacity to produce 100,000 widgets per year, but it currently produces and sells 75,000 widgets per year. The following information relates to current production: If a special sales order is accepted for 7000 widgets at a price of $41 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
Large-Scale
Refers to operations or activities on a wide or extensive level, often involving the production of goods in large quantities or operations of large organizations or systems.
Profit-Maximizing Price
The price level at which a company can make the most profit while selling its goods or services.
Nondiscriminating Monopolist
A monopolist who charges all consumers the same price for its product, as opposed to practicing price discrimination.
Marginal Revenue
The extra revenue generated by the sale of an additional unit of a product or service.
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