Walton Company Manufactures a Product with the Following Costs Per

question 23

Multiple Choice

Walton Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: The company has the capacity to produce 90,000 units. The product regularly sells for £120.
If a wholesaler offered to buy 4,500 units for £100 each, the effect of the special order on income would be a

• A) £153,000 increase.
• B) £45,000 increase.
• C) £450,000 increase.
• D) £90,000 decrease.

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Definitions:

Debits

Accounting entries that increase asset or expense accounts, or decrease liability or equity accounts, on the left side of a general ledger.

Credits

Accounting entries that increase liability, revenue, or equity accounts and decrease asset or expense accounts.

Transaction

Refers to an agreement or exchange between two or more parties that results in the movement of money or resources.

Exchanges

Transactions where goods, services, or securities are traded between two parties without the use of cash.