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:

Call Next Week

A directive or plan to contact someone or follow up on a matter in the subsequent week.

Trial Close

A sales technique used to gauge a potential customer's interest or readiness to buy before the final close.

Closing

The process of helping people make a decision that will benefit them by asking them to buy.

Professional Salesperson

An individual skilled in the art of negotiating and closing sales deals, typically with extensive knowledge of the product or service being sold.