Wallyworld Company Manufactures a Product with the Following Costs Per

question 121

Multiple Choice

Wallyworld Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: The company has the capacity to produce 90,000 units. The product regularly sells for $120. A wholesaler has
Offered to pay $110 a unit for 7,500 units.
If the special order is accepted, the effect on operating income would be a

• A) $75,000 decrease.
• B) $429,000 increase.
• C) $249,000 increase.
• D) $495,000 increase.

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Definitions:

Turnover

The rate at which employees leave a company and are replaced by new employees over a given period.

Craft Union

A labor union representing workers who are skilled in a specific craft or trade.

Industrial Union

A labor union organizing method where all workers in the same industry, regardless of job function, are organized into a single union.