Globe Manufacturing Company Has Just Obtained a Request for a Special

question 116

Essay

Globe Manufacturing Company has just obtained a request for a special order of 12, 000 units to be shipped at the end of the current year at a discount price of $7.00 each.The company has a production capacity of 90, 000 units per year.At present, Globe is only selling 80, 000 units per year through regular channels at a selling price of $11.00 each.Globe's per unit costs at an 80, 000 unit level of production and sales are as follows: Variable selling and administrative expense will drop to $0.30 per unit on the special order units.The special order has to be taken in its entirety.This means that by accepting the special order, Globe will be forced to not sell 2, 000 units to its regular customers.
Required:
If Globe accepts this special order, by what amount will its net operating income increase or decrease?

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Definitions:

Survival Of The Fittest

A concept in natural selection that suggests that organisms best adapted to their environment are more likely to survive and reproduce.

Evolution

The process by which different kinds of living organisms are thought to have developed and diversified from earlier forms during the history of the earth.

Epigenetics

Epigenetics studies the chemical modifications to DNA and related proteins that affect gene expression without altering the DNA sequence, often in response to environmental factors.

Genetic Mapping

The process of determining the location and chemical sequence of specific genes on chromosomes.