Rojo Corporation Has Received a Request for a Special Order

question 69

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:

AIDS Research

The scientific study focused on understanding, treating, and preventing AIDS (Acquired Immunodeficiency Syndrome) and its causative agent, HIV.

Cognitive Dissonance

The uneasy psychological state of having two or more opposing beliefs, ideas, or values concurrently.

Festinger and Carlsmith

Researchers known for their 1959 cognitive dissonance experiment which demonstrated how individuals seek consistency among their cognitions.

Counterattitudinal Behaviour

Actions that contradict one's own beliefs or attitudes, often used in experiments to explore cognitive dissonance.