Figure 17-2 Wannabee Company Manufactures a Product with the Following

question 36

Multiple Choice

Figure 17-2 Wannabee Company manufactures a product with the following costs per unit at the expected production level of 84,000 units:
The company has the capacity to produce 90,000 units. The product regularly sells for $120.
Refer to Figure 17-2. A wholesaler has offered to pay $110 a unit for 7,500 units.
If the special order is accepted, the effect on operating income would be a

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

Identify and assess various complicating factors in capital investment decisions, such as leasing alternatives, price levels, and tax considerations.

Calculate and interpret the net present value (NPV) of an investment and utilize it to make investment decisions.

Utilize the internal rate of return (IRR) method for evaluating investment opportunities and compare it to the company's desired rate of return.

Analyze and appraise capital investments using the concept of the time value of money.