Wolff Ltd Sells Product P at a Price of $38 a a Unit

question 97

Multiple Choice

Wolff Ltd. sells product P at a price of $38 a unit. The per-unit cost data are: direct materials $8, direct labor $10, and overhead $12 (25% fixed and 75% variable) . Wolff has sufficient capacity to accept a special order for 40,000 units just received. Selling costs associated with this order would be $3 per unit. At a selling price of $33 per unit, the operating profit will

• A) Increase by $60,000
• B) Increase by $80,000
• C) Increase by $120,000
• D) Increase by $160,000

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Definitions:

Value Cocreation

Value cocreation is a business strategy that emphasizes the involvement of customers, suppliers, and other stakeholders in the development process of products or services, leading to enhanced value for all parties.

Production-oriented Era

A period in business history when the focus was on production efficiency and product capabilities rather than on understanding the needs and preferences of consumers.

Sales-oriented Era

A period in history where businesses prioritized selling as many products as possible, often with aggressive sales tactics, focusing on sales volume over customer needs.

Market-oriented Era

A period in business thought where the focus is on understanding and satisfying the needs and preferences of customers through research and market analysis.