The normal selling price of Scott Companys product is $35 per unit. The costs of production are:
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Question:
The normal selling price of Scott Companys product is $35 per unit. The costs of production are: direct materials, $6; direct labor, $5; variable overhead, $5; and fixed overhead, $6 (based on normal capacity). The company has received a special order for 12,800 units at a unit sales price of $19. There is ample unused capacity to fill the order and $2 per unit will be incurred for additional packaging. If the order is accepted, operating income will
- A. increase by $12,800.
- B. decrease by $38,400.
- C. increase by $38,400.
- D. decrease by $12,800.
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