Use the Information Below to Answer the Following Question(s)

question 75

Multiple Choice

Use the information below to answer the following question(s) :
Woodson Corporation provided the following information regarding its only product:

-Assuming there is excess capacity at Woodson Corporation, what would be the effect on operating income of accepting a special order for 1,000 units at a sale price of $55 per product? (NOTE: Assume regular sales are not affected by the special order.)

• A) Decrease by $1,500
• B) Increase by $55,000
• C) Increase by $1,500
• D) Increase by $108,500

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Definitions:

Profitability Index

The Profitability Index is a financial metric that compares the present value of future cash flows generated by a project to the initial investment, used to assess the attractiveness of an investment.

Average Accounting Return

A method of measuring an investment's profitability by comparing its average net income to its average book value.

Return on Assets

A profitability ratio that measures how efficiently a company is using its assets to generate profit, calculated by dividing net income by total assets.

Shareholder Wealth

The total value of an investment in a company's stock, encompassing capital gains and dividends received over time.