Dakota Company Has Been Producing and Selling 42,000 Hats a Year.There

question 132

Multiple Choice

Dakota Company has been producing and selling 42,000 hats a year.There are no beginning and ending inventories.The Dakota Corporation has the capacity to produce 52,000 hats.The following data is available:
$\begin{array} { l } \text { Selling price per unit}& \$30\\ \text { Variable manufacturing costs per unit}& \$13\\ \text {Variable selling and administrative costs per unit }& \$7\\\end{array}$

$\begin{array} { l } \text {Total fixed manufacturing costs }&\$126,000 \\ \text { Total fixed selling and administrative costs }& \$84,000\\\end{array}$

If a special order is accepted for 10,000 hats at a price of $25 per unit,net income would ________.

• A) increase by $20,000
• B) increase by $50,000
• C) increase by $90,000
• D) decrease by $24,000

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