The Following Information Relates to a Product Produced by Faulkland

question 95

Multiple Choice

The following information relates to a product produced by Faulkland Company:
$$\begin{array} { | l r | } \hline \text { Direct materials } & \$ 10 \\\hline \text { Direct labor } & 7 \\\hline \text { Variable overhead } & 6 \\\hline \text { Fixed overhead } & 8 \\\hline \text { Unit cost } & \$ 31 \\\hline\end{array}$$
Fixed selling costs are $1,000,000 per year.Variable selling costs of $4 per unit sold are added to cover the transportation cost.Although production capacity is 500,000 units per year,Faulkland expects to produce only 400,000 units next year.The product normally sells for $40 each.A customer has offered to buy 60,000 units for $30 each.The customer will pay the transportation charge on the units purchased.If Faulkland accepts the special order,the effect on income would be a:

• A) $60,000 increase.
• B) $180,000 increase.
• C) $420,000 increase.
• D) $600,000 decrease.

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Definitions:

Effective Channels

Means or mediums through which communication, information, or goods are delivered efficiently.

Oral Medium

A form of communication that uses spoken words to convey messages or information.

Oral Medium

A channel of communication that involves spoken words to convey messages, such as in conversations, speeches, or presentations.

Immediate Feedback

Quick response or reaction received shortly after an action or communication, crucial for real-time adjustments and learning.