Meco Company Produces a Product That Has a Regular Selling

question 92

Multiple Choice

Meco 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. Meco 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 Meco accepts the order.
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Assuming Meco Company has excess capacity, the effect on profits of accepting the order would be a

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

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Definitions:

Hedonism

A philosophical theory that pleasure or happiness is the highest good and proper aim of human life.

Existentialism

A philosophical theory or approach emphasizing individual freedom, choice, and subjectivity.

Moral Idealism

A philosophical belief in which any action is considered ethical if it is universally acceptable or beneficial, without regard to specific consequences.

Moral Idealism

A philosophy that emphasizes the importance of adhering to moral principles in decision making, regardless of the consequences.