A Customer Has Requested That Gamba Corporation Fill a Special

question 52

Multiple Choice

A customer has requested that Gamba Corporation fill a special order for 3,000 units of product Q41 for $25.00 a unit.While the product would be modified slightly for the special order,product Q41's normal unit product cost is $21.40:
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 Q41 that would increase the variable costs by $7.00 per unit and that would require an investment of $15,000 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)$(5,700)
• B)$(21,300)
• C)$(25,200)
• D)$10,800

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Definitions:

Management Levels

The different layers of management in an organization, typically categorized into top-level (executives), middle-level (managers), and lower-level (supervisors or team leaders).

Environmental Uncertainty

The degree to which an organization lacks information about its external environment, making it difficult to predict future trends or events.

Systems Design

Refers to the process of defining the architecture, components, modules, interfaces, and data for a system to satisfy specified requirements.

Organic Designs

Describes an organizational structure that is more flexible and adaptable, typically characterized by loose, informal communication and decentralized decision making.