Eric Inc. has a chance to sell Leafs T-shirts to a new fan who wants to give
Question:
Eric Inc. has a chance to sell Leafs T-shirts to a new fan who wants to give them away. The customer has offered a price of $10.00 for each T-shirt and wants 3,000 T-shirts in total. The normal selling price is $18.00 each. Eric Inc. has enough capacity to fill the order.
Unit information for the company's normal level of production is as follows:
Direct materials | $3.00 |
Direct labour | $2.00 |
Variable overhead | $4.50 |
Fixed overhead | $2.50 |
Total | $12.00 |
Fixed overhead will not be effected by this special order.
Using the above information answer the following questions.
Should Eric Inc. accept or reject the special order?
Enter the letter A for accept.
Enter the letter B for reject.
Would operating income increase or decrease if the special order was accepted.
Enter the letter A for increase.
Enter the letter B for decrease.
By how much will operating income increase or decrease by if the order was accepted?
Enter your answer as a positive number even if operating income would decrease.