Examlex

Solved

Widget Inc

question 177

Multiple Choice

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: 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 5800 widgets at a price of $40 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)  A) Increase by $232,000 B) Increase by $17,400 C) Increase by $75,400 D) Decrease by $75,400 If a special sales order is accepted for 5800 widgets at a price of $40 per unit, fixed costs remain unchanged, and no variable marketing and administrative costs will be incurred for this order, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)


Definitions:

Total Profit

The total income a business earns after paying all costs and expenses.

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit of a good changes as the production level increases.

Total Profit

The difference between a firm's total revenues and its total costs, representing the overall financial gain from its operations.

Lawn Mowing

The action of cutting the grass in an area or lawn to maintain its appearance and health, often performed as a domestic chore or commercial service.

Related Questions