Gundy Company Manufactures a Product with the Following Costs Per

question 53

Multiple Choice

Gundy Company manufactures a product with the following costs per unit at the expected production of 30,000 units: The company has the capacity to produce 30,000 units.The product regularly sells for $40.A wholesaler has offered to pay $32 a unit for 2,000 units.
Suppose the firm chooses to accept the special order and reject some regular sales.What would be the effect on Gundy's operating income?
$\begin{array}{lr}\text { Direct materials } & \$ 4 \\\text { Direct labour } & 12 \\\text { Variable manufacturing overhead } & 6 \\\text { Fixed manufacturing overhead } & 8\end{array}$

• A)$0
• B)a $4,000 increase
• C)a $16,000 decrease
• D)a $20,000 increase

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Definitions:

Discussion To Consensus

involves engaging in a dialogue with the goal of reaching an agreement or mutual understanding among all participants.

Planning Fallacy

A cognitive bias where people underestimate the time, costs, and risks of future actions while overestimating the benefits, leading to overly optimistic project timelines.

Fair Procedures

Practices and policies that are impartial, equitable, and just in decision-making processes or dispute resolutions.

Collective Information-processing Model

A model that describes how groups gather, share, and evaluate information to make decisions collectively.