Walton Company Manufactures a Product with the Following Costs Per

question 135

Multiple Choice

Walton Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: $\begin{array}{lr}\text { Direct materials } & \$ 12 \\\text { Direct labour } & 36 \\\text { Variable manufacturing overhead } & 18 \\\text { Fixed manufacturing overhead } & 24\end{array}$ The company has the capacity to produce 90,000 units.The product regularly sells for $120.A wholesaler has offered to pay $110 a unit for 7,500 units.Suppose the special order is accepted.What would be the effect on Walton's operating income?

• A) a $75,000 decrease
• B) a $249,000 increase
• C) a $429,000 increase
• D) a $495,000 increase

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Definitions:

Receptor Potential

A change in membrane potential in a sensory receptor due to an external stimulus, which can initiate a cellular response.

Rods

Photoreceptor cells in the retina of the eye that are responsible for vision at low light levels.

Photoreceptors

Specialized cells in the retina of the eye that are sensitive to light and enable vision.

Tactile Sensors

Devices designed to measure parameters like pressure, force, and texture, simulating the sense of touch in robotics or electronic devices.