The Varone Company Makes a Single Product Called a Hom

question 115

Multiple Choice

The Varone Company makes a single product called a Hom. The company has the capacity to produce 40,000 Homs per year. Per unit costs to produce and sell one Hom at that activity level are: The regular selling price for one Hom is $60. A special order has been received at Varone from the Fairview Company to purchase 8,000 Homs next year at 15% off the regular selling price. If this special order were accepted, the variable selling expense would be reduced by 25%. However, Varone would have to purchase a specialized machine to engrave the Fairview name on each Hom in the special order. This machine would cost $12,000 and it would have no use after the special order was filled. The total fixed costs, both manufacturing and selling, are constant within the relevant range of 30,000 to 40,000 Homs per year. Assume direct labor is a variable cost.
-If Varone has an opportunity to sell 37,960 Homs next year through regular channels and the special order is accepted for 15% off the regular selling price,the effect on net operating income next year due to accepting this order would be a:

• A)$33,320 decrease
• B)$33,320 increase
• C)$35,480 decrease
• D)$35,480 increase

Recognize the role of communication in differentiating human societies from those of other animals.

Appreciate the importance of cultural transmission across generations through inventions and knowledge.

Analyze the influence of pathogens on the development of collectivist versus individualist cultures.

Understand the concept of the duplex mind and its implications for human behavior.

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A term describing a range of congenital abnormalities affecting the structure of the pelvic area.

Androgen Insensitivity

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Infants who are in the very first weeks of life following birth, typically considered to be up to one month old.

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Actions exhibited by individuals or groups relating to physical intimacy or sexual activity.