Felix Time Company Manufactures and Sells Watches for $40 Each

question 158

Multiple Choice

Felix Time Company manufactures and sells watches for $40 each. Times Products Company has offered Felix Time $25 per watch for a one-time order of 6,000 watches. The total manufacturing cost per watch is $30 per unit, and consists of variable costs of $22 per watch and fixed overhead costs of $8 per watch. Assume that Felix Time has excess capacity and that the special order would not adversely affect regular sales. What is the change in operating income that would result from accepting the special sales order?

• A)increase of $18,000
• B)decrease of $18,000
• C)increase of $150,000
• D)decrease of $150,000

Distinguish between the requirements and options under IFRS and ASPE regarding financial statements.

Calculate and understand the significance of return on common shareholders' equity.

Identify the roles and responsibilities of shareholders, board of directors, and management in a corporation.

Understand the concept of legal capital and its implications for shareholder distributions.

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Definitions:

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