Walton Company Manufactures a Product with the Following Costs Per

question 139

Multiple Choice

Walton 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.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?
$\begin{array}{lr}\text { Direct materials } & \$ 12 \\\text { Direct labour } & 36 \\\text { Variable manufacturing overhead } & 18 \\\text { Fixed manufacturing overhead } & 24\end{array}$

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

---

Definitions:

Compounded Quarterly

Interest calculation method where interest is added to the principal sum at the end of every quarter, leading to interest earnings on interest.

Investing

The practice of assigning funds with the aim of producing income or profit.

Monthly

Occurring every month or once a month.

Compounded Quarterly

A process of calculating interest where the interest earned is added to the principal at the end of every three months, leading to an increase in the amount on which subsequent interest is calculated.