Walnut has received a special order for 2,500 units of its product at a special price of $230. The product normally sells for $290 and has the following manufacturing costs:     Per unit Direct materials   $ 83 Direct labor     56 Variable manufacturing overhead     62 Fixed manufacturing overhead     66 Unit cost   $ 267   Walnut is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Walnut accepts the order, what effect will the order have on the company’s short-term profit?   Multiple Choice   $150,000 decrease   Zero   $92,500 decrease   $92,500 increase

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Walnut has received a special order for 2,500 units of its product at a special price of $230. The product normally sells for $290 and has the following manufacturing costs:
 

  Per unit
Direct materials   $ 83
Direct labor     56
Variable manufacturing overhead     62
Fixed manufacturing overhead     66
Unit cost   $ 267
 


Walnut is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Walnut accepts the order, what effect will the order have on the company’s short-term profit?

 

Multiple Choice

  •  
    $150,000 decrease
  •  

    Zero

  •  
    $92,500 decrease
  •  
    $92,500 increase
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