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Answer the Following Questions Using the Information Below:
Welch Manufacturing

question 60

Multiple Choice

Answer the following questions using the information below:
Welch Manufacturing is approached by a European customer to fulfil a one-time-only special order for a product similar to one offered to domestic customers.Welch Manufacturing has excess capacity.The following per unit data apply for sales to regular customers:
 Variable costs:  Direct materials $40 Direct labour 20 Manufacturing support 35 Marketing costs 15 Fixed costs:  Manufacturing support 45 Marketing costs 15 Total costs 170 Mark-up (50%)  85 Targeted selling price $255\begin{array} { l r } \text { Variable costs: } & \\\quad \text { Direct materials } & \$ 40 \\\quad \text { Direct labour } & 20 \\\text { Manufacturing support } & 35 \\\quad \text { Marketing costs } & 15 \\\text { Fixed costs: } & \\\quad \text { Manufacturing support } & 45 \\\quad \text { Marketing costs } & 15 \\\text { Total costs } & 170 \\\text { Mark-up (50\%) } & \underline { 85 } \\\text { Targeted selling price } & \$ 255\end{array}
-What is the change in operating profits if the one-time-only special order for 1000 units is accepted for $180 a unit by Welch?

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Definitions:

Placebo Effect

A phenomenon in which a person's condition improves because they believe they are receiving treatment, even though the treatment has no therapeutic value.

Participant Bias

A type of bias that occurs when participants in a study act or respond differently because they know they are being observed.

Double-Blind Experiments

Double-Blind Experiments are studies where neither the participants nor the experimenters know who has been administered the treatment or the placebo, reducing biases.

Experimenter Bias

The influence of the experimenter’s expectations on the outcome of research.

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