The Normal Selling Price of Our Product Is $42 Per

question 62

Multiple Choice

The normal selling price of our product is $42 per unit.The costs of production are direct materials,$8; direct labor,$6; variable overhead,$7; and fixed overhead,$4 (based on normal capacity) .The company has received a special order for 10,600 units at a unit sales price of $23.There is ample unused capacity to fill the order and $1 per unit will be incurred for additional freight costs.If the order is accepted,operating income will

• A) increase by $10,600.
• B) decrease by $31,800.
• C) increase by $21,200.
• D) decrease by $21,200.

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Definitions:

Ground Squirrel

A type of rodent closely related to chipmunks, known for living in burrows and having a diet primarily consisting of seeds, nuts, and various plants.

Alarm Cry

A vocalization in many species intended to alert others of imminent danger or to summon assistance.

Predator

An organism that hunts and kills other organisms (prey) for food.

Genes

Segments of DNA that code for specific traits or functions and are the basic physical and functional units of heredity.