The following information relates to a product produced by Faulkland Company: Direct materials 10 Direct labor 7 Variable overhead Fixed overhead Unit cost 31 Fixed selling costs are $1,000,000 per year. Variable selling costs of $4 per unit sold are added to cover the transportation cost. Although production capacity is 500,000 units per year, Faulkland expects to produce only 400,000 units next year. The product normally sells for $40 each. A customer has offered to buy 60,000 units for $30 each. The customer will pay the transportation charge on the units purchaßed. If Faulkland accepts the special order, the effect on income would be a: a) $60,000 increase. b) $180,000 increase. c) $420,000 increase.

The following information relates to a product produced by Faulkland Company: Direct materials 10 Direct labor 7 Variable overhead Fixed overhead Unit cost 31 Fixed selling costs are $1,000,000 per year. Variable selling costs of $4 per unit sold are added to cover the transportation cost. Although production capacity is 500,000 units per year, Faulkland expects to produce only 400,000 units next year. The product normally sells for $40 each. A customer has offered to buy 60,000 units for $30 each. The customer will pay the transportation charge on the units purchaßed. If Faulkland accepts the special order, the effect on income would be a: a) $60,000 increase. b) $180,000 increase. c) $420,000 increase.

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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