Ross has received a special order for 16,000 units of its product at a special price of $23. The product normally sells for $31 and has the following manufacturing costs: Per unitDirect materials $7Direct labor 6Variable manufacturing overhead 3Fixed manufacturing overhead 10Unit cost $26 Assume that Ross has sufficient capacity to fill the order. If Ross accepts the order, what effect will the order have on the company’s short-term profit? Multiple Choice $48,000 decrease $112,000 increase $80,000 decrease $240,000 increase

Formulas: Profit = Number of units * (Offer price - Variable cost)

Answered: Ross has received a special order for…

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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Ross has received a special order for 16,000 units of its product at a special price of $23. The product normally sells for $31 and has the following manufacturing costs:

	Per unit
Direct materials		$	7
Direct labor			6
Variable manufacturing overhead			3
Fixed manufacturing overhead			10
Unit cost		$	26

Assume that Ross has sufficient capacity to fill the order. If Ross accepts the order, what effect will the order have on the company’s short-term profit?

Multiple Choice

$48,000 decrease
$112,000 increase
$80,000 decrease
$240,000 increase

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