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Home Q & A Board Other Fields Homework Help Business Accounting
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bernie2981 bernie2981
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8 years ago
Pluto Incorporated provided the following information regarding its single product:

Direct materials used   $240,000
Direct labor incurred   $420,000
Variable manufacturing overhead   $160,000
Fixed manufacturing overhead   $100,000
Variable selling and administrative expenses   $60,000
Fixed selling and administrative expenses   $20,000

The regular selling price for the product is $80. The annual quantity of units produced and sold is 40,000 units (the costs above relate to the 40,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory.

What would be the effect on operating income of accepting a special order for 3,500 units at a sale price of $55 per product?
A) Increase by $269,500
B) Increase by $115,500
C) Decrease by $115,500
D) Decrease by $269,500
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Managerial Accounting

Managerial Accounting


Edition: 4th
Author:
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nucleinuclei
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8 years ago
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bernie2981 Author
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#2
8 years ago
You're such a dedicated member, I very much appreciate the help.

Marking this solved ✓
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#3
3 years ago
Thank you
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