Tunnel Incorporated Provided the Following Information Regarding Its Single Product

question 186

Multiple Choice

Tunnel Incorporated provided the following information regarding its single product: The regular selling price for the product is $80. The annual quantity of units produced and sold is 44,000 units (the costs above relate to the 44,000 units production level) . The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory.
What would be the effect on operating income of accepting a special order for 1050 units at a sale price of $43 per product? The special order units would not require any variable selling and administrative expenses. (Round any intermediary calculations to the nearest cent. Round your final answer to the nearest dollar.)

• A)Decrease by $20,045
• B)Decrease by $23,956
• C)Increase by $20,045
• D)Increase by $23,956

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Definitions:

Logic

The science that investigates the principles governing correct or reliable inference and reasoning.

Psychology

The scientific study of mind and behavior, including the examination of consciousness, perception, emotions, and interpersonal relationships.

Certainty

The state of being sure or confident about something, often implying a lack of doubt.

Nonprogrammed Decisions

Choices enacted in reaction to scenarios that are distinct, ill-defined, highly unstructured, and carry significant implications for the organization.