Rojo Corporation Has Received a Request for a Special Order

question 109

Multiple Choice

Rojo Corporation has received a request for a special order of 8,000 units of product W68 for $27.20 each. Product W68's unit product cost is $18.50, determined as follows: Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product W68 that would increase the variable costs by $7.90 per unit and that would require an investment of $31,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. If the special order is accepted, the company's overall net operating income would increase (decrease) by:

• A)$(4,400)
• B)$69,600
• C)$30,600
• D)$(24,600)

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Definitions:

Reinforcement Schedules

In operant conditioning, the rule that is used to determine when and how frequently an action should be reinforced.

Positive Reinforcement

A technique used in behavior modification that increases the likelihood of a behavior by associating it with a positive outcome or reward.

Negative Reinforcement

A behavioral principle where a response is strengthened by the removal or avoidance of an unpleasant stimulus.

Desired Response

The specific reaction or outcome that is aimed for or anticipated in a particular situation, experiment, or communication.