Rexeleg Company manufactures a product with the following costs per unit at the expected production of...
Rexeleg Company manufactures a product with the following costs
per unit at the expected production of 40,000 units:
| Direct materials | $5 |
| Direct labor | 10 |
| Variable overhead | 7 |
| Fixed overhead | 9 |
The company has the capacity to produce 50,000 units. The product
regularly sells for $50. A wholesaler has offered to pay $43 per
unit for 3,000 units.
If the firm chooses to accept the special order and reject some
regular sales, the effect on operating income would be a:
a.$30,000 increase.
b.$45,000 decrease.
c.$64,000 increase.
d.$21,000 decrease.
Homework Answers
|
Increase(Decrease) in operating income = (wholesaler price - Outside selling price) * 3000 = (43 - 50) * 3000 = (21,000) Option D is the answer |
|
| Comment if you face any issues |
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