Minor Electric Has Received a Special One-Time Order for 1,500

question 12

Multiple Choice

Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $5 per unit.Minor currently produces and sells 7,500 units at $6.00 each.This level represents 75% of its capacity.Production costs for these units are $4.50 per unit,which includes $3.00 variable cost and $1.50 fixed cost.To produce the special order,a new machine needs to be purchased at a cost of $1,000 with a zero salvage value.Management expects no other changes in costs as a result of the additional production.Should the company accept the special order?

• A)No,because net income would decrease by $1,500.
• B)No,because net income would decrease by $2,000.
• C)Yes,because net income would increase by $7,500.
• D)Yes,because net income would increase by $2,000.
• E)No,because net income would decrease by $5,500.

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Definitions:

Customer Satisfaction

A measure of how products or services meet or surpass customer expectations, crucial for maintaining customer loyalty and driving business success.

BPI

A systematic method, Business Process Improvement aims to optimize the basic processes of an organization, leading to enhanced efficiency.

Analysis Phase

A stage in the development process where the needs or conditions to meet for a new or altered product or project are determined.

Delivery Time

The total time taken for goods or items to be sent from a supplier and arrive at their final destination.