Sundial Company manufactures and sells watches for $42 each. Tick-Tock Company has offered Sundial $30 per watch for a one-time order of 5,600 watches. The total manufacturing cost per watch is $30 unit and consists of variable costs of $22 per watch and fixed overhead costs of $8 per watch. Assume that Sundial has excess capacity and that the special pricing order would not adversely affect regular sale. What is the change in operating income that would result from accepting the special sales order? OA. decrease of $168,000 OB. increase of $168,000 OC. decrease of $44,800 OD. increase of $44,800
Sundial Company manufactures and sells watches for $42 each. Tick-Tock Company has offered Sundial $30 per watch for a one-time order of 5,600 watches. The total manufacturing cost per watch is $30 unit and consists of variable costs of $22 per watch and fixed overhead costs of $8 per watch. Assume that Sundial has excess capacity and that the special pricing order would not adversely affect regular sale. What is the change in operating income that would result from accepting the special sales order? OA. decrease of $168,000 OB. increase of $168,000 OC. decrease of $44,800 OD. increase of $44,800
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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