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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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
Per unit | |||
Direct materials | $ | 83 | |
Direct labor | 56 | ||
Variable manufacturing |
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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