The Following Information Relates to a Product Produced by Malkovich

question 72

Multiple Choice

The following information relates to a product produced by Malkovich Company: Fixed selling costs are $500,000 per year, and variable selling costs are $12 per unit sold. Although production
Capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for $120 each. A customer has offered to buy 60,000 units for $90 each.
If the firm produces the special order, the effect on income would be a

• A) $360,000 increase.
• B) $360,000 decrease.
• C) $540,000 decrease.
• D) $540,000 increase.

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Definitions:

Interests

Activities, subjects, or pursuits that capture attention, engagement, or concern.

Context

The circumstances, background, or settings that influence and give meaning to an event, statement, or idea.

Goals

Targets, objectives, or desired outcomes that individuals, groups, or organizations aim to achieve.

Situation

The set of circumstances or context in which events occur or decisions are made.