Grill Time Sells Its Barbecue Sets for $170 Each Grill Time Has Enough Idle Capacity to Accept a One-Time-Only

question 181

Essay

Grill Time sells its barbecue sets for $170 each.Suppose the company incurs the following average cost per barbecue set:
$\begin{array}{lr}\text { Direct materials } & \$ 52 \\\text { Direct labor } & 28 \\\text { Variable manufacturing overhead } & 11 \\\text { Variable selling expenses } & 5 \\\text { Fixed manufacturing overhead } & \underline{24} \\\text { Total cost } & \$ 120 \\\text { * } \$ 1,800,000 / 75,000 \text { units }\end{array}$
Grill Time has enough idle capacity to accept a one-time-only special order from Backyard Living,Inc.for 2,000 barbecue sets at a sales price of $130 per set.Grill Time will not incur $2 of variable selling expenses for this order.
How would accepting the order affect Grill Time's operating income?

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Definitions:

Object Permanence

The understanding that objects continue to exist even when they cannot be seen, heard, or otherwise sensed.

Dishabituation

A renewal of response to a stimulus following a period of habituation, often due to the introduction of a novel stimulus.

Primary Circular Reaction

In Piaget’s theory, repeating an action that produced a chance event involving the infant’s body.

Mental Representations

Internal images, ideas, concepts, or thoughts that represent external reality or abstract notions within the mind.