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

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