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:

Urge to Be Thin

A strong desire or compulsion toward achieving a lower body weight or slim physique, often found in eating disorders.

Anorexics

Individuals suffering from anorexia nervosa, an eating disorder characterized by an obsessive fear of gaining weight and severely restricting food intake.

Severe Obesity

A condition characterized by an excessively high body mass index (BMI), often exceeding 40, which poses significant health risks.

Kleptomania

A psychiatric disorder characterized by an irresistible urge to steal items not needed for personal use or monetary value.