Inscribe,Inc

question 48

Multiple Choice

Inscribe,Inc.manufactures and sells pens for $7 each.Cubby Corp.has offered Inscribe,Inc.$4 per pen for a one-time order of 3600 pens.The total manufacturing cost per pen,using absorption costing,is $1 per unit and consists of variable costs of $0.85 per pen and fixed overhead costs of $0.15 per pen.Assume that Inscribe,Inc.has excess capacity and that the special pricing order would not adversely affect regular sales.What is the change in operating income that would result from accepting the special pricing order?

• A) increase of $10,800
• B) decrease of $10,800
• C) increase of $11,340
• D) decrease of $11,340

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Definitions:

Vascular

Relating to the body's blood vessels, including arteries, veins, and capillaries, that transport blood throughout the body.

Nonstratified

Referring to a type of epithelial tissue that consists of a single layer of cells, as opposed to multiple stacked layers.

Melanocytes

Cells located in the bottom layer of the skin's epidermis that produce melanin, the pigment responsible for skin and hair color.

Adipose Tissue

Body tissue containing stored fat, serving as a source of energy, insulation, and cushioning for organs.