Johnson Company manufactures a variety of shoes and has received a special one-time-only order directly from a wholesaler. Johnson has sufficient idle capacity to accept the special order to manufacture 15,000 pairs of sneakers at a price of $7.50 per pair. Johnson's normal selling price is $11.50 per pair of sneakers. Variable manufacturing costs are $5.00 per pair and fixed manufacturing costs are $3.00 per pair. Johnson's variable selling expense for its normal line of sneakers is $1.00 per pair. What would be the effect on Johnson's operating income if the company accepted the special order? Oa. Increase by $22,500 Ob. Increase by $37,500 Oc. Decrease by $60,000 Od. Increase by $52,500
Johnson Company manufactures a variety of shoes and has received a special one-time-only order directly from a wholesaler. Johnson has sufficient idle capacity to accept the special order to manufacture 15,000 pairs of sneakers at a price of $7.50 per pair. Johnson's normal selling price is $11.50 per pair of sneakers. Variable manufacturing costs are $5.00 per pair and fixed manufacturing costs are $3.00 per pair. Johnson's variable selling expense for its normal line of sneakers is $1.00 per pair. What would be the effect on Johnson's operating income if the company accepted the special order? Oa. Increase by $22,500 Ob. Increase by $37,500 Oc. Decrease by $60,000 Od. Increase by $52,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Johnson Company manufactures a variety of shoes and has received a special one-time-only order
directly from a wholesaler. Johnson has sufficient idle capacity to accept the special order to
manufacture 15,000 pairs of sneakers at a price of $7.50 per pair. Johnson's normal selling price
is $11.50 per pair of sneakers. Variable manufacturing costs are $5.00 per pair and fixed
manufacturing costs are $3.00 per pair. Johnson's variable selling expense for its normal line of
sneakers is $1.00 per pair. What would be the effect on Johnson's operating income if the
company accepted the special order?
Oa. Increase by $22,500
Ob. Increase by $37,500
Oc. Decrease by $60,000
Od. Increase by $52,500
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