Noreaster Company Produces a Product That Has a Regular Selling

question 80

Multiple Choice

Noreaster Company produces a product that has a regular selling price of $360 per unit. At a typical monthly production volume of 2,000 units, the product's average unit cost of goods sold amounts to $270. Included in this average is $120,000 of fixed manufacturing costs. All selling and administrative costs are fixed and amount to $30,000 per month.
Noreaster Company has just received a special order for 1,000 units at $240 per unit. The buyer will pay transportation, and the regular selling price will not be affected if Noreaster accepts the order.
Assuming Noreaster Company has excess capacity, the effect on profits of accepting the order would be a

• A)$30,000 increase.
• B)$30,000 decrease
• C)$60,000 increase.
• D)$60,000 decrease..

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Definitions:

Lampreys

Jawless fish known for their distinctive, toothed, funnel-like sucking mouth, often considered parasites or predatory on other fish.

Jawless Fish

A group of vertebrates known for lacking jaws, including lampreys and hagfish, representing the earliest fish in the evolutionary history.

Bones

The rigid organs that constitute part of the endoskeleton of vertebrates, providing support and protection and enabling movement.

Fins

External appendages on fishes and some other aquatic animals, used primarily for movement, steering, and balance in water.