Question

Visionary Game Company sells 600,000 units per year of a particular video game cartridge at $12 each. The current unit cost of the game is broken down as follows:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . $3.00
Direct labor . . . . . . . . . . . . . . . . . . . . . . . .. 1.00
Variable factory overhead . . . . . . . . . . . . . .. 3.50
Fixed factory overhead . . . . . . . . . . . . . . . ... 1.50
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... $9.00
At the beginning of the current year, Visionary received a special order for 10,000 of these game cartridges per month, for one year only, at a sales price of $8 per unit. To fill the order, Visionary will have to rent additional assembly space at a cost of $12,000 ($1,000 per month). Compute the estimated increase or decrease in annual operating income that will result from accepting this special order.



$1.99
Sales1
Views129
Comments0
  • CreatedApril 17, 2014
  • Files Included
Post your question
5000