Minnesota Company Has No Beginning and Ending Inventories,and Has the Following

question 122

Multiple Choice

Minnesota Company has no beginning and ending inventories,and has the following data about its only product:
$\begin{array}{ll}\text { Fixed manufacturing costs } & \$ 92,000 \\\text { Fixed selling and administrative costs } & \$ 69,000 \\\text { Variable manufacturing costs } & \$ 1,030,000 \\\text { Variable selling and administrative costs } & \$ 120,000 \\\text { Selling price(per unit) } & \$ 125\end{array}$
$\begin{array} { l } \text {Units produced and sold }& 23,000\\\end{array}$

Assume there is excess capacity.The company has received a special order for 1,000 units at $60.00 per unit.If the special order is accepted,what will be the effect on net income?

• A) net income increases by $3,000
• B) net income increases by $6,000
• C) net income increases by $10,000
• D) net income increases by $15,220

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Definitions:

Job Evaluation

A systematic process used by organizations to assess the relative value of jobs within the organization in order to establish fair compensation.

Job Specifications

Detailed descriptions of the qualifications, skills, experience, and attributes required to perform a specific job effectively.

Employee Qualifications

The skills, education, experiences, and certifications that individuals possess, qualifying them for particular job roles or tasks.

Reporting Structure

The hierarchy within an organization that defines who reports to whom, outlining the lines of authority and communication.