General Mattress (GM) Company sells mattresses at a regular price of $800. The total cost per unit is $650, which consists of $150 direct labor per unit, $250 direct materials per unit, $50 fixed overhead per unit, and $200 variable overhead per unit. A hotel chain offered to buy 1,000 mattresses from GM at a discounted price of $650. This is a one-time special order (i.e., a short-term decision), and GM has enough spare capacity to accommodate this order. If GM accepts the special order, GM's profit will: decrease by $50,000 O decrease by $150,000 remain the same O increase by $150,000 O increase by $50,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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General Mattress (GM) Company sells mattresses at a
regular price of $800. The total cost per unit is $650,
which consists of $150 direct labor per unit, $250
direct materials per unit, $50 fixed overhead per unit,
and $200 variable overhead per unit. A hotel chain
offered to buy 1,000 mattresses from GM at a
discounted price of $650. This is a one-time special
order (i.e., a short-term decision), and GM has enough
spare capacity to accommodate this order. If GM
accepts the special order, GM's profit will:
decrease by $50,000
O decrease by $150,000
remain the same
increase by $150,000
O increase by $50,000
Transcribed Image Text:General Mattress (GM) Company sells mattresses at a regular price of $800. The total cost per unit is $650, which consists of $150 direct labor per unit, $250 direct materials per unit, $50 fixed overhead per unit, and $200 variable overhead per unit. A hotel chain offered to buy 1,000 mattresses from GM at a discounted price of $650. This is a one-time special order (i.e., a short-term decision), and GM has enough spare capacity to accommodate this order. If GM accepts the special order, GM's profit will: decrease by $50,000 O decrease by $150,000 remain the same increase by $150,000 O increase by $50,000
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