Reggie Corporation Manufactures a Single Product with the Following Unit

question 65

Multiple Choice

Reggie Corporation manufactures a single product with the following unit costs for 1,000 units: $\begin{array}{lr}\text { Direct materials } & \$ 2,400 \\\text { Direct labour } & 960 \\\text { Factory overhead ( } 30 \% \text { variable) } & 1,800 \\\text { Selling expenses (50\% variable) } & 900 \\\text { Administrative expenses (10\% variable) } & 840 \\\text { Total per unit } & \$ 6.900\end{array}$ Recently,a company approached Reggie Corporation about buying 100 units for $5,100 each.Currently,the models are sold to dealers for $7,800.Reggie Corporation's capacity is sufficient to produce the extra 100 units.No additional selling expenses would be incurred on the special order. Suppose the special order is accepted.How much will income change?

• A) It will decrease by $180,000.
• B) It will not change.
• C) It will increase by $111,600.
• D) It will increase by $398,400.

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Definitions:

High-Paying Occupations

Jobs that offer salaries significantly above the median income level for workers, often requiring specialized skills or education.

Minority Workers

Workers who belong to a racial, ethnic, or socio-cultural minority group within the broader workforce.

Taste-For-Discrimination Model

A theoretical model that explains how discrimination can affect economic decisions and outcomes by assuming some agents have a 'taste' or preference for discriminating against certain groups.

Wages

Compensation given to employees for their work, often determined by the hour, day, or by the amount of work completed.