Answer Increase $14,000 Increase $7,775 Decrease $7,875 Decrease $14,000 Wells,
ID: 2426928 • Letter: A
Question
Answer
Increase $14,000
Increase $7,775
Decrease $7,875
Decrease $14,000
Wells, Inc. manufactures and sells pens for $7 each. Walton Corp. has offered Wells, Inc. $3 per pen for a one-time order of 3,500 pens. The total manufacturing cost per pen, using absorption costing, is $1 per unit and consists of variable costs of $0.75 per pen and fixed overhead costs of $0.25 per pen. Assume that Wells, Inc. has excess capacity and that the special pricing order would not adversely affect regular sales. What is the change in operating income that would result from accepting the special pricing order?
Explanation / Answer
Answer is Increase $7,875
Sales 3 Variable cost 0.75 Contribution 2.25 change in operating income 3500*2.25 7875Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.