16. Race Corporation manufactures batons. Race can manufacture 300,000 batons a year at a variable cost of $750,000 and a fixed cost of $450,000. Based on Race's predictions for next year, 240,000 batons will be sold at the regular price of $5.00 each. In addition, a special order was placed for 60,000 batons to be sold at a 40% discount off the regular price. Total fixed costs would be unaffected by this order. By what amount would the company's operating income be increased or decreased as a result of the special order? Select one: a. $180,000 increase. b. $60,000 decrease. c. $36,000 increase. d. $30,000 increase.
16. Race Corporation manufactures batons. Race can manufacture 300,000 batons a year at a variable cost of $750,000 and a fixed cost of $450,000. Based on Race's predictions for next year, 240,000 batons will be sold at the regular price of $5.00 each. In addition, a special order was placed for 60,000 batons to be sold at a 40% discount off the regular price. Total fixed costs would be unaffected by this order. By what amount would the company's operating income be increased or decreased as a result of the special order? Select one: a. $180,000 increase. b. $60,000 decrease. c. $36,000 increase. d. $30,000 increase.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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16.
Race Corporation manufactures batons. Race can manufacture 300,000 batons a year at a variable cost of $750,000 and a fixed cost of $450,000. Based on Race's predictions for next year, 240,000 batons will be sold at the regular price of $5.00 each. In addition, a special order was placed for 60,000 batons to be sold at a 40% discount off the regular price. Total fixed costs would be unaffected by this order. By what amount would the company's operating income be increased or decreased as a result of the special order?
Select one:
a. $180,000 increase.
b. $60,000 decrease.
c. $36,000 increase.
d. $30,000 increase.
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