Luca Inc. has received a special order for 2,000 units of its product at a special price of $75. The product normally sells for $100 and has the following manufacturing costs:Assume that Luca Inc. has sufficient capacity to fill the order without harming normal production and sales. If Luca Inc. accepts the order, what effect will the order have on the company's short-term profit?Per Unit Direct materials$30Direct labor$20Variable manufacturing overhead$15Fixed manufacturing overhead$25 a.$50,000 decrease b.$30,000 increase c.$20,000 increase d.$30,000 decrease

Management accounting is widely used by managers to determine the differential costs of the product…

Answered: Luca Inc. has received a special order…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Luca Inc. has received a special order for 2,000 units of its product at a special price of $75. The product normally sells for $100 and has the following manufacturing costs:

Assume that Luca Inc. has sufficient capacity to fill the order without harming normal production and sales. If Luca Inc. accepts the order, what effect will the order have on the company's short-term profit?

Per Unit

Direct materials

$30

Direct labor

$20

Variable manufacturing overhead

$15

Fixed manufacturing overhead

$25

a.

$50,000 decrease

b.

$30,000 increase

c.

$20,000 increase

d.

$30,000 decrease

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