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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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
Per unit | |||
Direct materials | $ | 7 | |
Direct labor | 6 | ||
Variable manufacturing |
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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