Stangle Company Manufactures Ties The Ties Normally Sell for $22 Each

question 100

Essay

Stangle Company manufactures ties.When 28,000 ties are produced,the costs per unit are:
$\begin{array} { l } \text {Direct materials }&\$0.60 \\ \text {Direct manufacturing labor }&\$ 3.00 \\ \text {Variable manufacturing overhead }&\$ 1.20 \\ \text {ixed manufacturing overhead }&\$1.60 \\ \text {Variable selling }&\$ 0.80 \\ \text { Fixed selling}&\$ 1.13 \\\end{array}$

The ties normally sell for $22 each.The company has received a special order for 2,000 ties at $8.00 per tie.The company will incur an additional variable selling cost of $1.50 per unit with the special order.The company has excess capacity.
Required:
Compute the amount by which the operating income would change if the order were accepted.

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Definitions:

Factor Analysis

A statistical method used to describe variability among observed variables in terms of a potentially lower number of unobserved variables called factors.

Construct Projective

A technique in psychology used to assess individuals' personality traits and unconscious desires or fears by interpreting their responses to ambiguous stimuli.

Fundamental Traits

Core characteristics that are considered stable in an individual's personality and form the foundation of their behavior and attitudes.

Reliability

The degree to which an assessment tool produces stable and consistent results across multiple occasions and observers.