Franklin has received a special order for 10,000 units of its product at a special price of $15. The product normally sells for $20 and has the following manufacturing costs: Per unit Direct materials - $6 Direct labor - $3 Variable manufacturing overhead - $2 Fixed manufacturing overhead - $6 Unit cost - $17 Franklin is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Franklin accepts the order, what effect will the order have on the company's short-term profit? A) $40,000 decrease B) $40,000 increase C) $50,000 decrease D) $10,000 increase

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 4EA: Zena Technology sells arc computer printers for $55 per unit. Unit product costs are: A special...
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Franklin has received a special order for 10,000 units of its product at a
special price of $15. The product normally sells for $20 and has the
following manufacturing costs:
Per unit Direct materials - $6
Direct labor - $3
Variable manufacturing overhead - $2
Fixed manufacturing overhead - $6
Unit cost - $17
Franklin is currently operating at full capacity and cannot fill the order
without harming normal production and sales. If Franklin accepts the
order, what effect will the order have on the company's short-term
profit?
A) $40,000 decrease
B) $40,000 increase
C) $50,000 decrease
D) $10,000 increase
Transcribed Image Text:Franklin has received a special order for 10,000 units of its product at a special price of $15. The product normally sells for $20 and has the following manufacturing costs: Per unit Direct materials - $6 Direct labor - $3 Variable manufacturing overhead - $2 Fixed manufacturing overhead - $6 Unit cost - $17 Franklin is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Franklin accepts the order, what effect will the order have on the company's short-term profit? A) $40,000 decrease B) $40,000 increase C) $50,000 decrease D) $10,000 increase
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