Visionary Game Company sells 600,000 units per year of a particular video game cartridge at $12 each.
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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.
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Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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